The struggling U.S. economy, and millions of unemployed Americans, will need as much as $1.7 trillion more in fiscal stimulus from the federal government to keep the worst of the COVID-19 economic crisis at bay.
The U.S. still needs massive fiscal support to sustain its recovery from the coronavirus-induced economic devastation, according to the world's largest hedge fund by assets Bridgewater Associates.
Its joint chief investment officer Greg Jensen said Bridgewater estimated the price tag for another coronavirus relief bill will range from $1.3 trillion to $1.7 trillion if it is to be sufficient for the U.S. economy to continue "in the way that it's been going."
"And it depends what it's used for...The policy that gets directly spent in the economy is much more effective per dollar than the dollar that's preventing more bad things from happening," Jensen in an interview with CNBC. "The money for states is going to prevent negatives. The stimulus checks will be direct positives."
Jensen said the U.S. economy had improved since the worst days of the pandemic during the first half of the year. He did, however, brush aside claims the early recovery would persist without additional fiscal assistance from the federal government.
"Too much is being drawn of where the economy is on those things relative to how it got there," he said. "If you take away the reason it got there, if you take away the supports to income, you're going to start to see a downturn at the worst possible time."
He said Congress must agree on the fourth coronavirus package. Democrats and Republicans have been deadlocked on a package since May 15 when the Democrats approved their $3.2 trillion HEROES Act - which the Republicans immediately rejected.
HEROES will retain the $600 weekly unemployment benefit provided for by the Democrat's previous CARES Act and will also provide for stimulus checks to individuals and families. The $600 weekly unemployment benefit ended July 27 and hasn't been replaced because Republicans no longer want it.
"You withdraw those supports, it's a massive tightening to the economy and an unsustainable one," Jensen said. "One way or the other, maybe we fall into a trap over the next month or two out of politics but over time that need for a major round of support is going to come."
