— This is the script of CNBC's news report for China's CCTV on July 27, 2020, Monday.
A new stimulus package has yet to be formally announced and still needs further consideration in the U.S. Congress, but it is actually in place almost. According to information from U.S. Treasury Secretary Steven Mnuchin and media reports, the new stimulus package is about $1 trillion. It includes a one-time personal subsidy of $1,200 and more support for business doctors and schools.
In an interview with CNBC last week, Mnuchin said President Trump's two priorities were getting children back to school safely and promoting employment. The new package provides $105 billion for schools. On the jobs front, the new package extends unemployment assistance, but eliminates the $600 weekly direct benefit and replaces it with 70 percent of the salary. While Mnuchin said they would be able to move quickly on an agreement with the Democrats , but chief economist at Wall Street brokerage Jefferey, said the two parties remain far apart, particularly on unemployment aid and state and local government subsidies, and a final agreement may not be reached by the end of the month.
On July 31st, the U.S. unemployment compensation plan of $600 per week amid pandemic will be invalidated. There are still tens of millions of people in the United States who cannot find work, and their livelihoods are a big problem. The new stimulus package is designed to boost the economy and help tackle unemployment, but will it completely prevent a second wave of job losses in the US? There are still many people who hold negative views on this issue.
A survey in June showed that 14% of US companies plan to lay off employees after they run out of PPP loans. By October 1, the ban on layoffs related to the aviation industry rescue will also expire. Now, several US airlines have warned of job cuts. Many analysts expect the wave of bankruptcies to intensify in the second half of the year, and the resulting job losses to be more severe. Alarmingly, several economists at Stanford university and the University of Chicago have pointed out that 40% of short-term unemployment may be transformed into permanent unemployment, which will bring more long-term problems to the American economy.
Unemployment hits not only blue-collar jobs, but also white-collar and even gold-collar. Tech companies in the United States have asked employees to work fewer hours or take furloughs to prevent them from burning through cash too quickly, according to a new report. And Reuters quotes a report from Compensation consulting firm Johnson Associates Inc. that predicts Wall Street will also likely cut bonuses and slash jobs this year.
Since the outbreak, the US government has launched several rounds of economic stimulus packages. The US budget deficit for the 12 months to June was $3tn. The annual federal deficit is likely to be the highest as a percentage of the economy since The second world war. The new stimulus package will also make the deficit problem worse. Goldman has also cut its forecast for a decline in the U.S. economy this year to 4.6 percent from 4.2 percent.
All this has put downward pressure on the dollar, the dollar index has generally been on a downward trend over the past three months.
The price of gold, a safe-haven and anti-inflation asset, continued to rise and exceeded $1,900 per ounce.
Bitcoin also recently passed $10,000 again.
We'll be watching for more details on the new stimulus package and what's going on in the U.S. economy.
United States Secretary of the Treasury
we're not gonna continue with in its current form because we're not going to pay people more money to stay at home than work but we want to make sure that the people that are out there that can't find jobs do get a reasonable wage replacement so it will be based on approximately 70% wage replacement. And we're also going to have a lot of tax credits to incentivize companies to hire people.