President Biden’s $ 1.9 trillion coronavirus relief proposal would restore the economy to pre-pandemic levels this summer, according to an analysis published Monday by S&P Global.
“We found that if the $ 1.9 trillion package were approved, the US economy would reach pre-crisis levels in the second quarter of 2021, with a stronger growth path driven by demand until 2023,” said the report.
Biden’s proposal would also put the economy on course to overcome its pre-pandemic growth trajectory by the end of 2022, when it would start to slow down, S&P said.
On the job front, S&P said that the injection of government funds would likely reduce unemployment to less than 4% in mid-2023, a year ahead of its current forecast. The nationwide unemployment rate stood at 6.7% in December, the most recent data available from the Department of Labor.
S&P also analyzed the $ 618 billion COVID-19 relief offer offered by a group of 10 Republican senators.
This measure would also boost growth, but would maintain a slower growth trajectory over time, according to S&P projections.
“While policies are accelerating to ‘fill the demand hole’ this year, they are temporary and GDP will return to a slower growth rate,” the report said.
The report comes on the same day that a report from the Congressional Budget Office predicted that the economic output gap would be $ 808 billion over the next four years, meaning that a smaller stimulus package than the one proposed by Biden could sufficient to restore the potential for economic growth.
S&P’s analysis, however, concluded that Biden’s proposal would maintain a higher growth trajectory.