Fortunately, many stimuli have already been implemented.The· Latest Coronavirus Relief BillSigned the law at the end of December and was about $ 900 billion. The impact has not yet appeared in GDP data.
On top of that, there is a sickening demand from pandemics. Last spring, when people started avoiding restaurants, travel, and unnecessary shopping Personal savings rate It soared and has only partially returned to normal since then.Much of that extra savings Current assets, Ready for people to spend when it’s safe.
It’s all possible that fiscal policymakers have already pushed the accelerator enough to bring the economy closer to the speed limit by the end of the year, when widespread vaccination is likely to release much of its stagnant demand. Is that there is. As President Biden suggested, an additional $ 1.9 trillion could push the economy far beyond its limits.
Indeed, some new federal spending may be needed for those who are experiencing public health and difficulties. But even spending for disaster relief increases demand for goods and services.
Beyond these required spending, there are generally no stronger cases of more fiscal stimulus. The $ 1,400 checks for most Americans in Biden’s proposal go to many who don’t need them.It Item cost only $ 422 billion.
Advocate for greater fiscal stimulus He points out that the estimation of potential GDP is very inaccurate. Moreover, they say there was little sign of inflation when the economy exceeded its potential in late 2019, so why worry now?
They are correct about inaccuracies, but some signs of inflation emerged in 2019. For the year ended in the first quarter of 2020, Employment cost index Wages and salaries in the private industry increased by 3.2%, the fastest rate in more than a decade. Had the pandemic continued to accelerate uninterrupted, companies would have ultimately passed on rising labor costs to consumers at higher prices.
Biden economy jeopardizes speeding tickets
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