GS are still expecting more stimulus spending from the US Congress by the end of September but they are starting to sweat it.
- Pre-election fiscal stimulus looks like a much closer call than it did a couple of months ago.
- We still think that Congress is slightly more likely than not to enact a stimulus package by the end of September, but there are mounting signs of trouble.
Main points from the GS note:
- The passage of recent deadlines did not come close to forcing an agreement.
- August jobs report reduces political pressure for further stimulus.
- The two sides appear to be moving farther apart.
- Neither party appears to face political pressure to agree.
- There isn't much time left to reach a deal. The House does not return until September 14 and is scheduled to be in session only ten full work days before adjourning October 2 ahead of the election. While the calendar can be extended if necessary, the probability of a deal will dwindle as the election approaches.
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Setting up for a cliffhanger ...
One of the more glittering of the bank alumni is working on a deal:
