On election night, Democratic campaign consultants may have been wondering, “Where did all these voters come from?” But unless the next Congress sets a legislative course over the next few months, Speaker of the House Nancy Pelosi may soon be wondering, “Where did all the voters go?”
The incoming Biden administration will need to navigate an extremely rough economic path ahead. Congress has struggled to reach an agreement for another round of stimulus to provide emergency relief for families and businesses. Now they must act before the “dark winter” ahead further deteriorates the economic recovery.
Michael Fryzel is a former NCUA Board chairman and is currently an attorney in Chicago.
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Albalushi is a principal at the RBL Group, a consulting company specializing in strategic HR, talent management and organizational alignment. He has over a decade of GCC (Gulf Corporation Council) experience in organizational transformation, business management and business analysis. He has worked in many sectors and industries including civil service, infrastructure, information technology, oil and energy, maritime and shipping, mining and metal, investment and management consultancy. Albalushi has significant experience as an internal HR manager and is well versed in many facets of human resources. He has helped several organizations implement and roll out their HRMS systems.
Kristen Rampe, CPA, is the managing partner of Rosenberg Associates. She is a nationally known consultant to CPA firms and a frequent speaker at practice management conferences. She specializes in helping small to mid-sized firms with partner compensation, partner agreements, buyouts, strategic planning and retreats, firm governance, and leadership development. She has co-authored four books along with Marc Rosenberg, CPA, including CPA Firm Management & Governance, CPA Firm Partner Retirement/Buyout Plans, What Really Makes CPA Firms Profitable?, and The Role of the Managing Partner. She spent 10 years in public practice with Big Four powerhouse PwC and top 50 ranked Frank Rimerman in San Francisco before founding her consulting practice in 2011 and merging with Marc Rosenberg in 2022. She was named Woman to Watch by the California Society of CPAs in 2011, 40 Under 40 by CPA Practice Advisor in 2015, and Top 100 Most Influential People in Accounting by Accounting Today for several years. Kristen holds an active CPA license with the state of California. She has been featured by Fortune and Investor's Business Daily. Kristen is a graduate of Butler University.
Gross domestic product, the broadest measure of goods and services produced across the economy, decreased at an annual rate of 32.9 percent in the second quarter of 2020, followed by a surged of 33.1 percent in the third quarter, in part due to earlier rounds of fiscal stimulus when businesses were offered Economic Injury Disaster Loans and forgivable Paycheck Protection Program loans, and individuals received direct payments and extended unemployment benefits.
Economic experts believe the current surge is not enough to stop continued losses incurred by various segments of economy.
“While the strong bounce back in activity from the initial devastation of COVID-19 was heartening, the recovery thus far has been highly uneven, and the path ahead is highly uncertain,” said Federal Reserve Governor Lael Brainard in a speech last month at the Society of Professional Economists annual online conference.
This highly uneven and uncertain bounce indicates the prospect of a K-shaped recovery, where some sectors continue to recover, while others see a steady decline.
The new stimulus package must focus on the sectors facing difficulties ahead to avoid colossal damage and massive layoffs.
According to the U.S. Chamber of Commerce, approximately 4 million small businesses — 13 percent of America’s 31 million smallest employers — have now exhausted their PPP loans, and many face permanent closure without further assistance.
According to the National Restaurant Association, the restaurant industry will lose $240 billion. U.S airlines may be forced to furlough 75,000 pilots, flight attendants, mechanics and other workers by the end of 2020 if Congress doesn’t act.
States and municipalities are now on verge of extreme shortfalls due to declines in tax revenues and rises in additional costs. Local governments that fund and operate public school systems will need more funding. “The average school district will face $1.8 million, or $485 per student, in additional costs for disinfectants, personal protective equipment and other preparations to bring students into classrooms this year,” according to the Association of School Business Officials.
The Federal Reserve’s Survey of Consumer Finances indicates that cash-strained households will continue to suffer as a result of continued unemployment and reduced working hours. The CARES Act did support these households either through direct payments or enhanced unemployment benefits this year, but the financial security of these households will depend on whether unemployment benefits will be extended or supplemented next year.
Therefore, it is imperative for Congress to ensure that the recovery reaches those who have been disproportionately affected. A targeted fiscal support can turn a K-shaped recovery into a broad-based, inclusive recovery to eliminate shortfalls in employment and provide a better outcome overall.
