The Biden government is riding a wave of growing optimism about the recovery from the COVID-19 recession, with the president and his main representatives taking action to sell their aid plan.
Economists say the US is ready for a quick recovery thanks in part to the $ 1.9 trillion relief bill signed on Thursday, which sends out another round of stimulus checks, extends expanded unemployment benefits and authorizes hundreds billions of dollars in support of local governments, small businesses and hard-hit sectors.
The White House hopes to gain momentum by passing the bill back President biden
Joe BidenPentagon is criticized for extending Guard time at the Capitol Booker to try to make the expansion of child tax credit permanent Sullivan says tariffs will not occupy the center of negotiations with China MOREOther company initiatives, such as a faster vaccination campaign, a package to rebuild the country’s infrastructure and additional measures that the government and some economists consider essential to improve the long-term trajectory of the economy.
“After long, dark years – an entire year – there is light and hope for better days if we all do our part,” said Biden during a speech to the nation on Thursday night. “This country will be vaccinated soon. Our economy will be recovering, our children will be back to school. “
“More than a year ago, no one could have imagined what we were about to go through. But now we are getting over it. “
Analysts are forecasting a 5 to 7 percent growth in gross domestic product (GDP) in 2021, after a 3.5 percent decline in 2020. The 6.2 percent unemployment rate, already well below the peak from the 14.7 percent crisis, it could fall below 4.1 percent by the end of the year, according to Goldman Sachs.
The new aid injection also comes amid signs of an accelerated economic recovery. The US created 379,000 robust jobs in February, consumer and business sentiment is skyrocketing, claims for unemployment benefits were below expectations this week and inflation was well below the Federal Reserve’s 2 percent target.
The US still has a steep climb ahead of it. Approximately 9.5 million jobs lost to COVID-19 have yet to be replaced, millions of families are still struggling with food and housing insecurity, and much of the U.S. workforce will need to find new careers while entire industries are trying to rebuild from scratch.
Still, many economists are confident that the Biden project kicked off the process, with vital lines crucial to sinking families, help for states to fund essential services and broad support to last well beyond direct payments to Americans who will be sent starting this weekend.
“The White House and the Democrats on the Hill have done an excellent job of ensuring that the combination of immediate aid and additional aid … will combine with the abundant domestic economy to boost the economy over the next three years at least,” he said. Joe Brusuelas, chief economist at the RSM tax and audit firm.
Biden is eager to show how he fulfilled his campaign promise to pass a major humanitarian aid plan, which polls show is supported by about 75% of Americans. Biden is heading to decisive states to sell the package, which passed Congress without a single vote from the Republican Party.
The president will travel to Pennsylvania on Tuesday and hold an event in Atlanta with Vice President Harris on Friday. First lady Jill Biden
Jill BidenOvernight Health Care: White House plans public relations blitz to sell coronavirus relief bill | US approves 100 million COVID-19 vaccines | Expanded ObamaCare becomes available April 1 White House plans public relations blitz to sell coronavirus relief bill The Hill’s 12:30 Report – Presented by Johns Hopkins University – Biden sets optimistic tone for summer MORE will also hold an event in Concord, NH, where Sen. Maggie Hassan
Margaret (Maggie) HassanSenate approves comprehensive coronavirus measure in party vote Senate rejects Cruz’s effort to block stimulus checks for undocumented immigrants The eight Democrats who voted ‘no’ on the minimum wage MORE (D) is expected to face a tough re-election campaign in 2022.
Republicans, however, say the huge increase in debt, the potential for inflation and higher taxes will again haunt Biden – particularly as he tries to approve a huge infrastructure project.
“There is no country that sees this debt growth and does not end with high interest rates and inflation,” Sen. Rick Scott (R-Fla.), A potential candidate for the Republican Party presidential nomination in 2024, told The Hill.
“If you look at history, when you end up with a government focused on raising taxes, you don’t end up with a growing economy. The only way out is to elect someone who knows how to grow the economy, ”he said, setting aside predictions that the 2021 economy could grow at the fastest pace in nearly 40 years.
While deficits and debt soared under the first President Trump
Donald TrumpPentagon gets criticized for extending Guard time at the Capitol Fundraising points to Trump-GOP cracks Trump’s rally organizer says Alex Jones threatened to take her off the stage: report MORE, including $ 1.9 trillion in tax cuts and significant increases in domestic spending, Republicans protested Biden’s $ 1.9 trillion bailout plan, saying it was misdirected and too big.
They got some support from Larry Summers, who served as Treasury secretary in the Clinton administration and argued that the huge bill could overheat the economy.
With newly aligned pockets, consumers would fight for goods and services from companies that remain under-capacity, leading to price increases and possible increases in interest rates, which could empty the economy.
In the past, ingrained expectations that prices would continue to rise kept borrowing costs high for homeowners, car owners and businesses.
Inflation concerns pushed bond yields to their highest point in a year on Friday.
But many experts, including Federal Reserve Chairman Jerome Powell, have maintained that these fears are overstated.
“The economy is a long way from our employment and inflation targets, and it is likely to take some time for substantial progress to be achieved,” Powell told the Senate Banking Committee last month.
He added that two decades of low inflation and a weaker relationship between public debt, low unemployment and rising prices means that the risks of overheating are now low.
February inflation figures were just 0.4 percent, and the March consumer survey found that people are expecting only a temporary jump in prices.
Lindsey M. Piegza, chief economist at Stifel, says that a little inflation will not be the end of the world.
“With average inflation of 1.3 percent over the past five years, there is a potential for inflation to come close to 3 percent over the next five years, without exceeding the long-term average of 2 percent,” she said.
Scott, however, says Powell’s assessment misses the mark.
“He is not looking at history. He’s clearly not looking at what happened in the past, ”he said.
The debt may yet come to haunt Biden.
Even before the COVID-19 bill was signed, debt levels were on their way to overcoming the peak of World War II by the end of the decade. The cost of debt service alone is already around $ 300 billion a year, about 9% of annual revenue.
“Going forward, we need to start paying for new priorities with new revenue and budget savings. And finally, when the economy recovers, we will have to reduce our deficits to more sustainable levels, ”said Maya MacGuineas, chairman of the Responsible Federal Budget Committee.
This could curb the appetite for infrastructure financed by the deficit of Democrats and central Republicans.
“They’ve already blown up their credit card. This will make it very difficult for them to spend on things we like, ”said Scott, adding that taxpayers have no appetite for tax increases.
Biden is yet to move forward with an infrastructure bill this year, and economists across the ideological spectrum have long considered these updates essential to accelerate the economy in the years to come.
Brusuelas said that without a significant infrastructure package, the US growth rate could fall back to its long-term trend of 1.8 percent a year.
“This is something I would think, for most Americans, is not acceptable,” he said. “The stakes are extremely high here, as we took advantage of what will be several good years of growth, but we move on and leave a legacy.”