There is currently much hope for another fiscal stimulus package to be delivered to the economy from Congress. While President Trump recently doused hopes of a quick passage, there a demand for more stimulus by both parties. While most hope more stimulus will cure the economy’s ills, it will likely disappoint due to the “2nd derivative effect.”

Let me explain.

In March, as the economy shut down due to the pandemic, the Federal Reserve leaped into action to flood the system with liquidity. At the same time, Congress passed a massive fiscal stimulus bill that expanded Unemployment Benefits and sent checks directly to households. As shown in the chart below of the upcoming expected GDP report, it worked. (We estimated GDP to increase by 30% from the previous quarter.)

That expected 30% surge in the third quarter, and surging stock market to boot, directly responded to both the fiscal and monetary stimulus supplied. The chart below adds the percentage change in federal expenditures to the chart for comparison.

The spike in Q2 in federal expenditure was from the initial CARES Act. In Q1 2020, the government spent $4.9 trillion in total, which was up $85.3 billion from Q4 2019. In Q2 2020, it increased sharply, including the passage of the CARES Act. Spending for Q2 jumped to $9.1 trillion, which was a $4.2 trillion increase over Q1 2020.

Those are the facts as published by the Federal Reserve. From this point forward, we have to start making some estimates and assumptions.

Assuming CARES-2

During Q3 2020, not much happened as the government was fighting over the next round of stimulus. As such, spending fell back to a more normal level of increase. However, if we assume that a second CARES Act is passed some time in Q4, and we apply

TOKYO, Sept 30 (Reuters)Oil prices fell for a second day on Wednesday, extending big losses from the previous session amid rising concerns about fuel demand as the coronavirus pandemic worsens.

Brent crude LCOc1 dropped 23 cents, or 0.6%, to $41.03 per barrel by 0048 GMT. West Texas Intermediate CLc1 fell 26 cents, or 0.7%, to $39.29.

The benchmarks fell more than 3% on Tuesday as global COVID-19 cases passed 1 million, having doubled in three months.

“It is important to keep in mind that moves to the downside have the potential to be supersized,” given rising coronavirus cases and increasing oil supplies around the world, said Bob Yawger, director of energy futures at Mizuho in New York.

CEOs of the world’s biggest trading companies are forecasting a weak recovery for oil demand and little movement in prices in the coming months and potentially years.

Weighing heavily on markets is the continued depressed demand for jet fuel, with air travel in the doldrums due to coronavirus restrictions and a general disinclination to travel.

Refineries have been trying to find ways to blend their product but an oversupply remains and some plants will be forced to shut down.

Marathon Petroleum Corp MPC.N, the largest oil refiner in the United States, started imposing job cuts on Tuesday, according to people familiar with the matter.

To counter the fall in demand the Organization of the Petroleum Exporting Countries is unlikely to increase oil production as planned from January next year, traders said on Tuesday.

The market looked past data from the American Petroleum Institute on Tuesday showing U.S. crude oil stocks fell against expectations, focussing instead on the rise in gasoline inventories. API/S

Also keeping traders and investors on tenterhooks is the November presidential election, which may remain undetermined on election