The Week in Business: Here Comes the Stimulus Cash
Some Hope
New unemployment claims fell again last week, approaching their lowest numbers since the pandemic began. It’s a promising sign that the economy may be recovering in earnest after months of uneven improvement, but there’s a long way to go — joblessness still remains incredibly high by historical standards. Meanwhile, the stock market had a great week. The SP 500 climbed to a record high on Thursday as investors salivated at the prospect of fresh stimulus cash boosting the economy.
What’s Next? (March 14-20)
Have Vaccine, Will Travel
Wondering what it will take to go on a serious vacation this summer — the kind where you fly through several time zones, cross at least one border and genuinely forget to check your email because real life seems so far away? Well, vaccine passports could be the answer. This Wednesday, the European Union Commission will announce its proposal for special documents that would allow vaccinated people to travel more freely. The United States, China and Britain are considering similar measures. The rules are intended to help the ailing travel and tourism industries while curbing virus transmission.
Frequently Asked Questions About the New Stimulus Package
Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more
This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax Accounting. Read more.
There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.
China Trade Talks, Redux
President Biden has vowed to take a tough stance on China, but also to chart a more strategic approach than the Trump administration, which sparred with Beijing in a monthslong trade war with questionable results. This week, two top members of Mr. Biden’s team, including Secretary of State Antony Blinken, will meet with their Chinese counterparts in Alaska. It will be the first high-level in-person contact between the two countries since Mr. Biden has taken office, and is expected to set the tone for relations moving forward.
A Pricey Pump
As the economy recovers and people start commuting, traveling and buying things again, oil prices are expected to go up — and up and up. Usually when this happens, the energy industry pumps more oil out of the ground to meet consumer demand. But not this time. Fuel companies have been reluctant to increase their supply, as many remain spooked by the pandemic’s destructive effect on oil markets in the past year. (Oil prices even turned negative at one point last April, when traders had to pay buyers to take barrels off their hands.) That’s a far cry from the $4 a gallon that some states could see this summer if demand continues apace.
Article source: https://www.nytimes.com/2021/03/14/business/the-week-in-business-stimulus-economy.html