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Plan Adviser: "$2 Trillion Stimulus Seen as ‘First Step’ to Fighting Recession"

Lee Barney | April 21 , 2020

The federal government’s $2 trillion stimulus package should help significantly ease an inevitable coronavirus recession; however, investment managers say that shoring up the economy, getting businesses back on track and having consumers who are confident enough to shop again will depend on how effectively the nation is able to contain and eventually eradicate the coronavirus.

“The monetary and fiscal stimulus will go a long way in lessening the impact of a recessionary period,” says Tom Stringfellow, president and chief investment officer at Frost Investment Advisors. “To put a floor under the market downturn and the cessation of businesses required Herculean efforts by governments and central banks across the globe. They have given lifelines to individuals who didn’t have sufficient savings to ride this out—people living paycheck to paycheck.”

More aid is going to be required, but the stimulus packages will provide both short- and intermediate-term funding for individuals and companies of all sizes, Stringfellow observes.

Stringfellow also says we need to have some certainty that the coronavirus has been contained before the economy can start to recover. “Monetary support will ensure there is liquidity in the markets and that credit channels are functioning,” he says. “Fiscal policy initiatives will provide income support. But for things to stabilize, investors will require some certainty that the virus has been contained. While implementation of historic levels of monetary and fiscal policies should help reignite the market’s recovery, it will still depend on the last leg of the economic support system—health care outcomes. As of now, that last leg is still missing.”

Excerpted from Plan Adviser on April 21, 2020. To view full article, click here.

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