WASHINGTON (Reuters) – The White House’s sudden exit from fiscal stimulus talks with Democrats in Congress has added another level of doubt to a U.S. economic recovery that already seemed to be weakening, choking off perhaps $1.5 trillion or more in future income and spending.
Even the most bullish policymakers and forecasters had penciled in more government aid to keep households and businesses hit by the coronavirus pandemic afloat through the end of the year. That money would bolster retail spending, rent payments and mortgages and whittle away at the 11 million lost jobs that have not yet been recouped.
Without it, the United States faces another roughly 5% hole in annual economic output.
Still, those assumptions evaporated on Tuesday after President Donald Trump announced his administration was ending the stimulus talks with U.S. House of Representatives Speaker Nancy Pelosi, with the two sides divided over whether to dribble out aid to specific sectors like airlines, or build a more comprehensive package to nurse the economy closer to the day when a coronavirus vaccine might be widely deployed.
U.S. stock markets fell sharply after the announcement, though Trump, a Republican who is seeking reelection in a Nov. 3 vote, later pulled back, saying he would support a few stand-alone bills. Wall Street’s main indexes clawed back the bulk of the losses on Wednesday.
“We’re still willing to be engaged, but I’m not optimistic for a comprehensive deal. I am optimistic that there’s about 10 things that we can do on a piecemeal basis if the speaker is