Households, communities, businesses, the Biden administration will flood the US economy with liquidity in the days following the vote on Tuesday of a $ 1900 billion aid plan, with a massive effect expected on growth.
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The rescue plan should boost US growth this year by three percentage points to + 7%, said Gregory Daco, chief economist at Oxford Economics on Monday.
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All the measures should boost growth in the United States by three percentage points this year, to raise it to 7%, said Monday Gregory Daco, chief economist at Oxford economics.
“American households will be the engines of the recovery,” he said, noting that low-income families will benefit from “generous budget transfers totaling around $ 900 billion,” including direct checks, additional unemployment benefits as well as credits and relief. taxes.
High-income families are expected to spend some of the excess savings accumulated over the past 11 months.
“This is the package of aid we need to revive our economy and restore it to the level before the pandemic,” said US Treasury Secretary Janet Yellen on Monday on the MSNBC channel, on the eve of final examination of the bill in the House of Representatives.
The world’s largest economy contracted 3.5% last year, its worst year since World War II.
The US Senate finally approved the rescue plan on Saturday but without any Republican voice, after a marathon vote on many amendments.
Majority in the lower house, Democrats should quickly approve the amended bill so that Joe Biden can promulgate it by March 14 and avoid the suspension of the payment of exceptional unemployment benefits.
$ 1,400 checks
The checks for $ 1,400 per adult and per child would then have to be sent immediately to millions of Americans subject to income conditions.
“This is an extremely important set of measures that will get millions, hundreds of millions of Americans, the help they need,” said Janet Yellen.
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With funding for schools combined with the prospect of tax credits for child care, many people will be able to get back to work.
According to the White House, this “historic” legislation will create more than 7 million new jobs this year, make health care more affordable while saving lives thanks to aid for generalized vaccination.
It will also cut child poverty in half.
“This is a radical change in American social policy,” notes Samuel Hammond, director of the Niskanen Center.
Full employment in 2022?
States and local communities have had to cut 1.4 million jobs due to declining income and increased spending, said Janet Yellen. The plan must allow “police and firefighters to keep their jobs”.
“If all goes well, our economy will return to the full employment we had before the pandemic next year,” she said.
“Part of the aid paid immediately should have an impact in economic data probably from April,” Michael Pugliese, economist at Wells Fargo told AFP.
According to him, this could translate into a jump in consumption, especially in retail businesses in April and May.
Other aid, such as tax credits for childcare, will probably be paid at the end of the year or at the beginning of next year.
“The plan is really very, very massive,” reacted economist Joel Naroff, according to whom the government’s objective is clear: to bring growth from a moderate rate to a rapid rate in a few months.
In January, the International Monetary Fund was already counting on US growth of 5.1%, without taking into account the rescue plan.
And, with the creation of 7 million jobs, the unemployment rate is expected to fall below 5% at the end of December, according to calculations by Gregory Daco.
In February, the labor market recovered with three times more job creations than in January (+379,000). And, the unemployment rate edged down to 6.2%.