By the end of February, the US government will see a third round of COVID-19 related financial aid signed, to be sent out to the American public by end March.
In today’s article we take stock of the ongoing coronavirus pandemic within the USA, how communities and the economy are faring, what to expect from the new aid plan, as well as looking at investment outlooks.
US $1.9 trillion aid plan
The US $1.9 trillion American Rescue Plan includes a third COVID relief check for $1400 USD, as part of a larger stimulus package that includes a contentious proposal to raise the minimum wage from $7.25 to $15 per hour.
With the bill likely to pass before the end of February, check roll-out will arrive between mid to end March, coinciding with the end of ongoing COVID unemployment benefits on March 14th.
As of Feb 21st, the $1400 check is intended go to all adults and adult dependents with limits and non-eligibility will apply to higher income earners:
- Single taxpayer – less than $75,000 (AGI -Adjusted Gross Income)
- Head of household -less than $112,500
- Married couple filing jointly -less than $150,000
- Single taxpayer – $100,000 or more
- Head of household – $150,000 or more
- Married couple filing jointly – $200,000 or more
However, it must be noted the aid package has not made its rounds through Congress yet, where it is sure to be reviewed and modified this week, before being signed by the President, for the IRS to begin issuing checks. With the Dems winning the Senate by-election in Georgia on Jan 6th, both the Senate and Congress are controlled by President Biden’s party, meaning that this bill can be passed without bi-partisan support. However, the main contention with this bill – both within the GOP and the Dems- is not so much the $1400 check amount, but rather, the sharp increase to the minimum wage, which hasn’t seen a rise since 2009.
While this aid will not be enough for individuals and families especially hard hit by the economic downturn it is obviously better than nothing. Some skeptics point out that aid may take away from fiscal security and could endanger the health of the government/ country as a whole long term. This perpetual catch-22 shows no signs of abating until the virus is brought under control.
Vaccine progress and roll-out
According to Bloomberg.com as of February 22, 2021 186 million COVID-19 vaccines have been administered.
And, from The New York Times, in the USA as of February 21, 2021
“The Centers for Disease Control and Prevention said on Sunday about 43.6 million people have received at least one dose of a Covid-19 vaccine, including about 18.9 million people who have been fully vaccinated.”
Providers are administering about 1.46 million doses per day on average, to slow down the almost 500,000 people in the US who have died form the coronavirus.
The current US approved vaccines from Pfizer-BioNTech and Moderna, require 2 does spaced out over 2 weeks. President Biden has promised to have 100 million people vaccinated by his 100 day in office – April 29th, 2021.
New Coronavirus variants
New strains, found so far in South Africa, Japan, the UK, Denmark and Brazil involve mutations of the Spike Protein, make the virus more transmissible and harder to control with current vaccines. The strategy to del with mutating variants will be to create and administer rolling-release vaccines more adapted to the evolving viruses. Whether this will be possible remains to be seen.
“Viruses constantly mutate, so it’s not surprising that the coronavirus that emerged in China in late 2019 has gone through multiple minor variations. But it has also undergone several major mutations, and it’s likely that more, significant variations will emerge.”
Ongoing Economic effects
“In 2020, the U.S. GDP contracted at a 3.5% annualized rate. It was the biggest contraction since 1946 and the first contraction since 2009.”
Many sectors such as travel, hospitality, tourism, retail, and restaurant have been particularly hard hit.
For people employed in the above sectors, many have seen their livelihood disappear and they struggle to find employment in other areas such as remote work. The third COVID Aid package is directed at these communities, families and individuals to help until other job and income sources become available.
“Many Democrats are arguing for a large stimulus package, pointing to renewed economic distress in recent months as the pandemic worsens. The January jobs report indicated subdued hiring, with employers adding a modest 49,000 jobs. White-collar services leading the gains as lower-paid service jobs continued to suffer.
Market and investment scenarios
Since we profiled Billionaire Immigrant Elon Musk on December 29, – 7 weeks ago – his net worth has soared from $153.4 bil USD to $199.9 bil USD, in part due to his recent Bitcoin and SpaceX investment surges. As of Feb 18th Musk surpassed Bezos of Amazon as world’s richest person for the second time this year.
The market continues to reach new heights, with growth and fintech stocks soaring particularly high.
Some analysts, such as AG Thorson of FX Empire, point to signs that this months trends mirror those from a year ago.
“The stock market is tracing out an almost identical pattern to the pre-Covid Crash of 2020. I doubt we will see another 35% decline, but a sharp and sudden plunge is possible.”
It must be always remembered that the market is not the economy. One sector that is showing steady growth is real estate, particularly in Florida. As immigrants continue to migrate to The Sunshine State, many Americans from the North-East are relocating for the tax friendly lifestyle paired with a relatively robust and diverse economy. With construction slowed, housing inventory is lower than ever. With the current higher demand, investments in property and rental is becoming a long term bet for many.
“People who could afford to buy homes enjoyed the lowest mortgage interest rates since at least 1971. Home sales rose and showed a trend of people who could work from home moving out of expensive, large cities into smaller, lower-cost cities where they could afford larger homes with more on-site amenities. States like California and New York as an example are seeing an exodus as a result of the pandemic.”
The upcoming $1.9 trillion US aid package will be finalized with the incurrent changes by late February 2021. This means that many Americans will see up to $1400 USD by end March to assist with the financial ramifications of a upturned economy as the US continues to deal with the health catastrophe.
The current market is running on a separate tangent than the economy as a whole, one exception being the real estate outlook in several US regions, including Florida.
The world and the US continue to valiantly fight the pandemic with different approaches and results. In regards to the US picture, let’s stay tuned to how the aid and the vaccines work in line with measures to bolster the economy as a whole, and not just the booming stock market.
To discuss your portfolio for 2021, we are here to help you navigate through these trying times.