Phase 4 Stimulus: Go Small or Go Home?

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While we think a stimulus package is still likely in Q1 2021, we think the markets are underappreciating the real possibility of no additional broad material stimulus forthcoming from Congress beyond some direct help for the healthcare sector. Now, if the Democrats win the two Senate seats in Georgia, this all becomes somewhat moot, as we think the odds would favor a stimulus packaging getting done. We also still believe it is possible (a 1 in 3 chance) but unlikely that some material stimulus beyond extra funding to help fight COVID occurs in the lame duck session. But under the assumption that the Republicans win both or one of the Georgia seats and that a broad stimulus package doesn’t occur in the lame duck session (our base case), we lay out the arguments why a broad material stimulus package may not occur at all next year.

For our full thoughts on the matter, please click here to download a PDF.