The Biden administration is leading a growing wave of optimism over the recovery from the COVID-19 recession, with the president and top surrogates on their way to sell their aid plan.
Economists say the US is ready for a quick recovery, thanks in part to the $ 1.9 trillion aid bill signed Thursday that sends another round of stimulus checks, expands extended unemployment benefits and authorizes hundreds of billions of dollars in support of local governments, small businesses and severely affected industries.
The White House hopes to push for the passage of the bill President Biden
Joe Biden: Pentagon takes heat to extend Guard’s time at Booker Capitol to try to make permanent expansion of children’s tax credit Sullivan says tariffs will not take center stage in talks with China MOREOther initiatives, such as a faster vaccination campaign, a package for rebuilding the nation’s infrastructure, and additional measures that the administration and some economists consider essential to improve the long-term trajectory of the economy.
“After long, dark years – a whole year – there is light and hope for better days ahead if we all play our part,” Biden said in a speech to the nation on Thursday night. “This country will be vaccinated in soon. Our economy will be in full swing, our children will return to school. “
“More than a year ago, no one could have imagined what we were going to go through. But now we’re going through this. ”
Analysts forecast an increase in gross domestic product (GDP) of between 5 and 7 percent in 2021, after falling by 3.5 percent in 2020. The unemployment rate of 6.2 percent, already much lower than the peak of the crisis 14.7 percent 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 United States added 379,000 solid jobs in February, consumer and business sentiment is on the rise, jobless demand fell below expectations this week, and inflation remained well below the Federal Reserve’s 2% target.
The US still has a steep climb ahead. About 9.5 million jobs lost to COVID-19 have not yet been replaced, millions of households are still struggling with food and housing insecurity, and large areas of the U.S. workforce will have to find new careers. as entire industries try to rebuild from the start.
Even so, many economists are confident that Biden’s bill initiated the process, with crucial lifelines for diving families, state aid to fund essential services, and broad support to last far beyond direct payments to Americans who will be sent starting this weekend.
“The White House and the Democrats on the Hill have done a remarkable job of ensuring that the combination of immediate aid and additional aid … will combine with abundant savings in the household to strengthen the economy over the next three years, at least,” he said. Joe Brusuelas, chief economist at RSM audit and tax firm.
Biden is eager to show how he has fulfilled his campaign promise to adopt a major aid plan, which polls show is supported by about 75% of Americans. Biden is heading to key swing states to sell the package, which passed Congress without a single GOP vote.
The president will travel to Pennsylvania on Tuesday and host an event in Atlanta on Friday with Vice President Harris. First lady Jill Biden
Jill BidenOvernight Health: White House Plans PR Blitz to Sell Coronavirus Aid Bill | US passes 100 million COVID-19 vaccines | ObamaCare extended becomes available April 1 White House plans to sell coronavirus aid bill Hill’s report 12:30 – Presented by Johns Hopkins University – Biden sets optimistic tone for summer MORE will also hold an event in Concord, NH, where Sen. Maggie Hassan
Senate Margaret (Maggie) Hassan approves radical coronavirus measure in partisan vote Senate rejects Cruz’s effort to block stimulus checks for undocumented immigrants The eight Democrats who voted ‘no’ for the minimum wage MORE (D) expects to face a tough re-election campaign in 2022.
However, Republicans say the huge debt growth, inflation potential and higher taxes will return to haunt Biden – especially as it tries to adopt a massive infrastructure bill.
“There is no country that sees this debt increase and does not reach high interest rates and inflation,” Senator Rick Scott (R-Fla.), A potential contender for the GOP nomination, told The Hill from 2024.
“If you look at history, when you reach an administration focused on raising taxes, you will not reach a growing economy. The only way out of this is to choose someone who knows how to grow the economy, “he said, dismissing predictions that the 2021 economy could grow at the fastest pace in 40 years.
While both deficits and debts rose below previous ones President Trump
Donald Trump Pentagon takes over heat to extend Guard’s time at Capitol fundraising to Trump-GOP cracks Trump rally organizer claims Alex Jones threatened to fire her, including $ 1.9 trillion in tax cuts and significant increases in domestic spending, Republicans have spoken out against Biden’s $ 1.9 trillion bailout plan, saying it was poorly targeted and far too large.
They received support from Larry Summers, who was secretary of the Treasury under President Clinton, and argued that the massive bill could overheat the economy.
With freshly aligned pockets, consumers should have sought goods and services from businesses that remain low-capacity, leading to price increases and possible interest rate hikes that could deflate the economy.
In the past, ingrained expectations that prices would continue to rise have kept borrowing costs high for homeowners as well as car owners and businesses.
Inflation concerns on Friday led bond yields to a one-year high.
But many experts, including Federal Reserve Chairman Jerome Powell, have argued that these fears are overburdened.
“The economy is far from our employment and inflation targets and it may take some substantial time for further progress,” 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 mean that the risks of overheating are now low.
February inflation figures reached just 0.4%, and the March consumer sentiment survey found that people expect only a temporary rise in prices.
Lindsey M. Piegza, chief economist at Stifel, says a little inflation will not be the end of the world.
“With inflation averaging 1.3% in the last five years, there is a potential for inflation to run nearly 3% in the next five without exceeding a long-term average of 2%,” she said.
However, Scott says Powell’s assessment fails.
“She is not looking at history. He is clearly not looking at what has happened in the past, “he said.
The debt may be haunting Biden.
Even before the COVID-19 bill was signed, the level of debt was already well on its way to overcoming the peak of World War II by the end of the decade. The cost of servicing debt alone already stands at about $ 300 billion a year, about 9 percent of annual revenue.
“In the future, we need to start paying for new priorities with new revenues and budget savings. And finally, once the economy recovers, we will have to reduce our deficits to more sustainable levels, ”said Maya MacGuineas, chair of the Committee on a Responsible Federal Budget.
This could reduce the appetite for deficit-funded infrastructure from centrist and Republican Democrats.
“It simply came to our notice then. It will be very difficult for them to spend on things we care about, ”Scott said, adding that taxpayers have no appetite for raising taxes.
Biden is still expected to promote an infrastructure bill this year, and economists across the ideological spectrum have long seen these updates as key to accelerating the economy in the coming years.
Brusuelas said that without a significant infrastructure package, the US growth rate could return to the long-term trend of 1.8% per year.
“This is something that I think is not acceptable to most Americans,” he said. “The stakes are extremely high here, because we are taking advantage of what are going to be a few good years of growth, but we are continuing and leaving a legacy.”