US Needs This Much In ‘Disaster Relief’ Funds To Keep Economy Afloat

Paul Krugman said Thursday the U.S. economy needs a major stimulus package to make life “tolerable.”

Krugman, a New York Times columnist who won a Nobel Memorial Prize in economics in 2008, told CNBC’s “Street Signs Asia” that a sizeable “disaster relief” package is necessary to keep the U.S. economy moving.

“A lot of people are going to be out of work, a lot of businesses are going to be stressed,” he said. “We need to just make life tolerable for them.”

Krugman said it was difficult to put a price tag on the amount he felt was necessary, but noted it would have to be “really, really big.” CNBC reported that the "big" number could be several hundred billion dollars a month.

U.S. data releases are expected to show modest gains in employment, though hiring is still well below pre-pandemic levels. The most recent reading of consumer confidence saw a slight dip in October after a sharp upward rebound in September.

A large number of U.S. taxpayers received $1,200 checks from the federal government through The CARES Act this year that supplemented unemployment insurance with $600 in extra support. That support has long since dried up, putting the economy on its back foot just ahead of the holiday spending season.

Speaking at a virtual meeting of the National Association of Business Economics in October, Federal Reserve Chairman Jerome Powell said that without a strong support package, there would be a weak recovery that would create “unnecessary hardship for households and businesses.”

Lawmakers spent the past few months trying to pass additional relief, though politicking ahead of the general election made partisan differences difficult to overcome. Senate Majority Leader Mitch McConnell, R-Ky., who secured another term in office Tuesday, said a stimulus package would be a top priority when lawmakers return to work next week.

Before the election, Republicans routinely balked over a Democratic proposal for $2.2 trillion in relief funds. Krugman added that he was concerned a new package would short change U.S. taxpayers.

“We’re still 11 million jobs down from where we were before this thing hit and all of those people are without wages, state local governments are in extreme financial distress, thousands of businesses — maybe hundreds of thousands — are on the verge of collapse...we need a lot to keep this thing afloat,” he warned.