“This package isn’t just big enough to fill a hole,” said Wendie Delberg, director of the Hamilton Project at the Brookings Institution. “It’s trying to do something a little different. Now that many people and businesses are desperately hurt, this money is a bailout for those people and that you have reached them all. You have to send a lot of money to be really convinced. “
But that doesn’t change the fact that the total money the government is sending out is more than the missing economic activity. And that may have meaningful consequences over the years to come. And that’s before explaining other promising proposals from the Biden administration, such as large-scale funding for new infrastructure.
“There are pros and cons,” she said. “It may be good to heat the economy, but there may also be painful adjustments with periods of slow growth on the other side of the mountain.”
In a booming economy, employers face a shortage of workers and have to bid for wages to attract staff. This, in theory, could foster a vicious cycle of rising prices, along with a potential shortage of various commodities.
For the past 13 years, perhaps longer, the United States has had the opposite problem. Many Americans at the highest working age (25-54 years) are either unemployed or completely out of the workforce. Meanwhile, wage growth has been weak and inflation has fallen below the Fed’s target.
Some argue that the CBO and private economists’ estimates of potential output are too pessimistic. Americans should dare to dream bigger. “I’m not sure what the output gap in GDP really is,” said Mark Paul, an economist at the New College of Florida. “For decades, economists have made mistakes and were too cautious, believing that full production is significantly lower than they really are. We run a consistently chilled economy and society It causes a big problem in cohesion. “
In a treatise He said the $ 3 trillion pandemic aid package, announced in December, was justified on the scale of unemployment endured. On an employment basis, the output gap seems to be worse than looking at GDP. This is due to the imbalance of unemployment in sectors such as restaurants where the economic production per worker is relatively low.
Biden wants the greatest inspiration in modern history. Is it too big?
Source link Biden wants the greatest inspiration in modern history. Is it too big?