According to an analysis released Monday by S&P Global, President Biden’s $ 1.9 trillion coronavirus relief proposal would restore the economy to pre-pandemic levels this summer.
“We find that if the $ 1.9 trillion package were enacted, the U.S. economy would reach pre-crisis levels in the second quarter of 2021, with a stronger growth path driven by demand until by 2023, ”the report states.
Biden’s proposal would also kick-start the economy to overcome its pre-pandemic growth trajectory by the end of 2022, when it would begin to slow, S&P said.
In terms of jobs, S&P said the injection of government funds would likely bring unemployment below 4 percent by mid-2023, a year ahead of the current forecast. The unemployment rate nationwide stood at 6.7 percent in December, the latest data available from the Department of Labor.
S&P also analyzed the $ 618 billion counter-proposal for the relief of COVID-19 offered by a group of 10 Republican senators.
This measure would also drive growth, but would maintain a lower growth trajectory over time, according to S&P projections.
“While policies are accelerating” filling the demand gap “this year, they are temporary and GDP will return at a slower pace of growth,” the report states.
The report comes on the same day that a report from the Congressional Budget Office predicted that the economic output gap would be $ 808 billion over the next four years, meaning a stimulus package smaller than the proposed by Biden could be enough to restore economic growth to potential.
S&P’s analysis, however, found that Biden’s proposal would maintain a higher growth trajectory.