Banking is one of the most closely linked industries to the overall U.S. economy because banks lend to nearly every industry, as well as to consumers. So, when PNC Financial Services Group (NYSE:PNC) CEO Bill Demchak says he thinks a second round of stimulus is “absolutely” needed to better help consumers and businesses make it through the coronavirus pandemic, it’s certainly not something to take lightly.
Loan losses dependent on stimulus
When the coronavirus pandemic started to hammer the economy earlier this year, Congress eventually responded in late March with a $2.2 trillion stimulus bill that included $1,200 stimulus checks, an extra $600 in unemployment benefits per week, and the Paycheck Protection Program (PPP) to aid small businesses that were ambushed by the pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the largest stimulus in U.S. history, has worked well so far, with banks not seeing near the level of loan losses they would expect to see in a recession, let alone one of this magnitude where many states essentially closed their local economies for more than a month.