The Biden administration is running a wave of growing optimism over the recovery from the COVID-19 recession, with the president and top replacements taking to the streets to sell their relief plan.
Economists say the United States is poised to recover quickly thanks in part to the $ 1.9 trillion relief bill signed Thursday, which sends another round of stimulus checks, expanding the benefits of ‘unemployment and authorizes hundreds of billions of dollars in support of local governments, small businesses and heavily affected industries.
The White House hopes to deviate from the momentum of the passage of the bill President Biden
Joe Biden: Pentagon is taking heat to extend Guardian time at Capitol Booker to try to make the child tax credit expansion permanent. Sullivan says tariffs will not take center stage in talks with China MOREOther initiatives, such as a faster vaccination campaign, a package to rebuild the country’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 to have better days ahead if we all do our part,” Biden said during a speech to the nation Thursday night. Our economy will be up and running, our children will be back in school. “
“More than a year ago no one could have imagined what we were about to go through. But now we are overcoming it. “
Analysts project gross domestic product (GDP) growth of between 5 and 7 percent in 2021, following a 3.5 percent decline in 2020. The unemployment rate of 6.2 percent, already well below its crisis high of 14.7 percent, it may drop to 4.1 percent. at the end of the year, according to Goldman Sachs.
The new injection of aid also appears amid signs of an accelerated economic recovery. The United States added 379,000 robust jobs in February, consumer and business sentiment rises, unemployment demands fell below expectations this week and inflation has remained well below target Federal Reserve target of 2 percent.
The US still has a sharp rise ahead. Approximately 9.5 million jobs lost have not yet been replaced by COVID-19, millions of households continue to struggle with food and housing insecurity, and large areas of the U.S. workforce will have to find new ones. races while entire industries try to rebuild from scratch.
Still, many economists are confident that the Biden bill has begun the process, with crucial lifelines for sinking families, helping states fund essential services, and broad support to last far beyond direct payments to the North. Americans to be shipped starting this weekend.
“The White House and Democrats on the Hill did an exceptional job of ensuring that the combination of immediate aid and additional aid … is combined with abundant household savings to bolster the economy for at least the next three years.” , said Joe Brusuelas, chief economist at audit and tax firm RSM.
Biden is eager to show how he fulfilled his campaign promise to approve a major aid plan, which polls have shown are supported by about 75 percent of Americans. Biden is heading to major swinging states to sell the package, which was passed by Congress without a single Republican Party vote.
The president will travel to Pennsylvania on Tuesday and hold an event in Atlanta on Friday with Vice President Harris. First lady Jill Biden
Jill Biden: Overnight Health Care: White House Plans PR Bombardment to Sell Coronavirus Relief Bill | The US passes 100 million vaccines against COVID-19 | Expanded ObamaCare to be Available on April 1 The White House plans a public relations bombing to sell a coronavirus relief bill Hill’s report 12:30 – Presented by Johns Hopkins University – Biden sets an optimistic tone for in summer MORE will also hold an event in Concord, NH, where the senator. Maggie Hassan
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Republicans, however, say the huge increase in debt, inflation potential and higher taxes will haunt Biden again, especially when he tries to pass a massive infrastructure bill.
“There is no country that sees this debt growth and does not end up with high interest rates and inflation,” Senator Rick Scott (R-Fla.), A potential candidate for the nomination, told The Hill. 2024 GOP presidency.
“If we look at history, when we end up with an administration focused on raising taxes, we do not end up with a growing economy. The only way out of that is to choose someone who knows how to grow the economy, ”he said, setting aside forecasts that the 2021 economy could grow at the fastest time in nearly 40 years.
Although deficits and debt skyrocketed at first President Trump
Donald Trump Pentagon takes heat to extend Guard time to capture Capitol funds to escape points in Trump-GOP cracks Trump rally organizer claims Alex Jones threatened to throw her off stage : report MORE, including $ 1.9 trillion in tax cuts and significant increases in household spending, Republicans criticized Biden’s $ 1.9 trillion bailout plan, saying it was poorly targeted and too large.
They received some support from Larry Summers, who served as Secretary of the Treasury under President Clinton and argued that the massive bill could overheat the economy.
With freshly lined pockets, consumers are looking for products and services from companies that have little capacity, leading to price increases and eventual interest rate hikes, which could deflate the economy.
In the past, well-established expectations that prices would continue to rise kept the costs of loans high for homeowners, vehicle owners and businesses.
Inflation concerns pushed bond yields to a one-year high on Friday.
But many experts, including Federal Reserve Chairman Jerome Powell, have said those fears are exaggerated.
“The economy is a long way from our employment and inflation targets, and it’s likely to take some time to make substantial progress,” Powell told the Senate Banking Commission 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 0.4 percent, and the March consumer sentiment survey found that people are only expecting a temporary jump in prices.
Lindsey M. Piegza, Stifel’s chief economist, says a little inflation won’t be the end of the world.
“With average inflation of 1.3 per cent in the last five years, there is potential for inflation to rise to close to 3 per cent over the next five years without exceeding a long-term average of 2 per cent. “, he said.
Scott, however, says Powell’s assessment fails.
“It simply came to our notice then. Of course, he doesn’t look at what happened in the past, “he said.
Debt may be chasing Biden.
Even before the signing of the COVID-19 bill, debt levels were already on track to peak their World War II peak by the end of the decade. The cost of debt service alone amounts to about $ 300 billion a year, about 9% of annual revenue.
“In the future, we must start paying for new priorities with new revenue 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 for a Responsible Federal Budget.
This could reduce the appetite for deficit-funded infrastructure by centrist Democrats and Republicans.
“They already maximized the credit card. It will be very difficult for them to spend on things that interest us, ”Scott said, adding that taxpayers are reluctant to raise taxes.
Biden is expected to continue moving forward on an infrastructure bill this year, and economists across the ideological spectrum have long considered these updates essential to accelerating the economy over the coming years.
Brussels said that without a significant infrastructure package, the U.S. growth rate could slow back to its long-term trend of 1.8 percent a year.
“This is something I think, for most Americans, is not acceptable,” he said. “The stakes are hugely high here as we take advantage of what will be several good years of growth, but we keep going and leave a legacy.”