The Day at a Glance | October 20 2020

The Top

· Deadline to reach fiscal agreement in the US.

· Economic indicators: Europe, Current account balance 19.9B vs 17.2B e.

Economic environment

Today is the deadline that Nancy Pelosi marked to reach a fiscal agreement in the United States before the election, which would extend aid to citizens and businesses due to the pandemic`s economic impacts. United States Secretary of the Treasury Steven Mnuchin is expected to have conversations with the Democratic leader of the House of Representatives, Nancy Pelosi, to reach an agreement regarding a fiscal package. Donald Trump said over the weekend that he could approve a package worth more than $1.8 trillion dollars, which was proposed by the White House and would help cover requests made my Democrats. However, even if an agreement is reached between the White House and the Democrats, Republican Senators have maintained their opposition to such a large package. According to the party`s leader in the Senate, Mitch McConnell, Senators would consider the proposal, but does not consider that there is enough political support for a package that exceeds $1 trillion. Republicans fear further deterioration concerning the country`s fiscal position, and with President Trump down in the polls, they don`t find any strong incentives to give in to the White House`s proposal. Because of this, they will vote on a reduced package today – of only $500 billion dollars – which would extend loan programs for businesses. Among the issues where an agreement cannot be reached include aid to local and State governments, fiscal stimulus for low income households and legal protection for businesses. The lack of an agreement could hinder the recovery in the last months of 2020 given the fact that the labor market has weakened in recent weeks and consumption could not be backed by government support. Additionally, there is a risk of seeing new outbreaks of the virus in the country, such as in the Midwest.