President Biden’s $ 1.9 trillion coronavirus bailout proposal would restore the economy to pre-pandemic levels by this summer, according to an analysis released Monday by S&P Global.
“We find that if the $ 1.9 trillion package were introduced into the law, the US economy would reach pre-crisis levels in the second quarter of 2021, with a stronger, demand-based growth path through 2023.” it is said in the report.
Biden’s proposal would also put the economy on track to overcome its pre-pandemic growth path by the end of 2022, when it will start to slow, S&P said.
In terms of employment, S&P said the injection of government funds would likely reduce unemployment below 4% by mid-2023, one year earlier than the current forecast. The national unemployment rate stood at 6.7% in December, the latest figures available from the Department of Labor.
S&P also considered a $ 618 billion counter-proposal for COVID-19 aid from a group of 10 Republican senators.
This measure would also stimulate growth, but would maintain a slower growth path over time, according to S&P projections.
“While policies are accelerating the ‘filling of the demand hole’ this year, they are temporary and GDP will return to a slower pace of growth,” the report said.
The report comes on the same day that a report from the Congressional Budget Bureau predicted that the economic output gap will be $ 808 billion over the next four years, meaning that a smaller stimulus package than Biden’s could be sufficient to restore economic growth to its full potential.
The S&P analysis, however, found that Biden’s proposal will maintain a higher growth trajectory.