FAST FIVE: "Look Out Below": Why The Economy Is About To Fly Off A Fiscal Cliff

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As a result, as Bank of America writes, the economy is facing fiscal cliffs which could cause the recovery to disintegrate, with four particular areas of focus: expiration of extended unemployment insurance, the fading support from stimulus checks, exhaustion of PPP stress from state and local aid gov'ts.

In response, BofA expects another stimulus bill to be passed in late July to address some – but not all – of these concerns, and “instead of a cliff, we will likely be facing a hill.” That may be optimistic, because any stimulus would need to be bipartisan, and if the Democrats wish to crush Trump's re-election chances, now is the time for them to push the economy into a depression with elections in just 4 months.

As such, this would translate to $387bn in support for labor income, mostly in May and June.

If the program was instead allowed to expire, presumably the unemployment rate would fall faster and more people would return to work.

Indeed state & local government have already started to cut jobs – in the April and May employment report, state and local governments shed nearly 1.6mn workers.

Categories: ZH