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US Stimulus Package

The US Stimulus Package of 2020, also known as the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, represents a historic $2.2 trillion economic stimulus bill in the United States.The bill was an emergency measure signed into law by then President Donald Trump on March 27, 2020. This was a direct response to the economic fallout of the Covid-19 pandemic, having convulsed the US economy.Markets had speculated on its passage for weeks, which when passed helped restore confidence in stock markets after multiple weeks of sizable losses, circuit breakers, and fear.The level of aid given out was unprecedented, involving spending of $300 billion in one-time cash payments for qualified Americans, $340 billion to state and local governments, $260 billion in unemployment benefits, and the rest in bailouts to small business and large corporations.The bill was the largest in US history, amounting to 10% of its annualized Gross domestic product (GDP).Impact of the US Stimulus Package on MarketsThe entirety of this bill will fall on the 2020 and 2021 annual budget in the US, raising concerns over how the country will be able pay it back without sizable tax increases.At the time of writing, there is already a second bill that is being negotiated on by the US Congress, with both political parties having since been unable to agree on an additional deal.The bill has also been met with controversy within the US given the amount of money doled out and loose levels of oversight as to where money ended up. The passage of the bill was a huge life preserver for financial markets, namely the US stock market, which in combination with monetary policy action from the US Federal Reserve helped share prices on major indices rebound in 2020.Any news or progress surrounding future stimulus packages have been welcomed by investors in the stock market, causing widespread optimism. At the time of writing, an additional stimulus package is expected to be passed by the incoming Biden administration in Q1 2021.

The US Stimulus Package of 2020, also known as the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, represents a historic $2.2 trillion economic stimulus bill in the United States.

The bill was an emergency measure signed into law by then President Donald Trump on March 27, 2020.

This was a direct response to the economic fallout of the Covid-19 pandemic, having convulsed the US economy.

Markets had speculated on its passage for weeks, which when passed helped restore confidence in stock markets after multiple weeks of sizable losses, circuit breakers, and fear.

The level of aid given out was unprecedented, involving spending of $300 billion in one-time cash payments for qualified Americans, $340 billion to state and local governments, $260 billion in unemployment benefits, and the rest in bailouts to small business and large corporations.

The bill was the largest in US history, amounting to 10% of its annualized Gross domestic product (GDP).

Impact of the US Stimulus Package on Markets

The entirety of this bill will fall on the 2020 and 2021 annual budget in the US, raising concerns over how the country will be able pay it back without sizable tax increases.

At the time of writing, there is already a second bill that is being negotiated on by the US Congress, with both political parties having since been unable to agree on an additional deal.

The bill has also been met with controversy within the US given the amount of money doled out and loose levels of oversight as to where money ended up.

The passage of the bill was a huge life preserver for financial markets, namely the US stock market, which in combination with monetary policy action from the US Federal Reserve helped share prices on major indices rebound in 2020.

Any news or progress surrounding future stimulus packages have been welcomed by investors in the stock market, causing widespread optimism.

At the time of writing, an additional stimulus package is expected to be passed by the incoming Biden administration in Q1 2021.