Bill Clinton was fond of saying that when it came to elections it was the economy, stupid. Judging by his unusually large budget stimulus package so early in his Administration, it would seem that Joe Biden does not subscribe to Clinton’s view.
The global economy is set to grow by 4.7% this year, faster than predicted in September (4.3%), thanks in part to a stronger recovery in the United States, where progress in distributing vaccines and a fresh fiscal stimulus of $1.9 trillion are expected to boost consumer spending, says a new UNCTAD report. But this will still leave the global economy over $10 trillion short of where it could have been by the end of 2021 if it had stayed on the pre-pandemic trend (Figure 1) and with persistent worries about the reality behind the rhetoric of a more resilient future.
America’s massive monetary and fiscal policy experiment is being conducted against the backdrop of a so-called everything asset and credit price bubble, which is very much larger and more pervasive than the earlier U.S. housing and credit market bubble.
President Joe Biden spent the first months of his presidency hunkered down as he worked on getting more vaccines into people’s arms and a massive bill to deal with the pandemic to his desk. With that $1.9 trillion legislation set to clear Congress and the pace of vaccinations picking up, the White House is preparing to embark on a new, far more public-facing phase.
With his $1.9 trillion stimulus plan,Biden is set to juice the economy for the next two years. The legislation includes a raft of measures that ensure a return to the era of big government, something that American voters appear to object to in theory but not in practice. It’s both an economic and political victory for him.
From the day Joe Biden stepped into the White House, his top priority was clear: Pass Covid relief. Ignore skirmishes elsewhere. Keep the message to Congress simple. And keep the message to the public even clearer: The current health and financial crisis would not go unanswered.
Governments and central banks have promised to shell out $19.5 trillion since the coronavirus erupted to “put a floor under the world economy,” according to the International Monetary Fund. Some countries need even more help to recover from the crisis, but they might not get it.
Nearly eight months after it was declared a pandemic, COVID-19 rages on, and there is no global consensus on the right policy mix for addressing the public health crisis. But on how to deal with the economic fallout, the winning strategy is clear: Spend early and spend big. And no major economy has done that better than the United States.
Governments, in other words, are spending as if there will be zero economic output between now and sometime this summer…This level of spending has no precedent in history—not even close. Not in war. Not in peacetime. Not ever.
In theory, the sweeping coronavirus rescue package passed by Congress and signed by the president last week was not supposed to benefitDonald Trump or anyone else in his family and their businesses. But according to a Politico analysis of the 880-page, $2 trillion legislation, Jared Kushner’s family business appears poised to capitalise on a provision of the relief bill allowing owners of low-to-moderate income housing to temporarily freeze mortgage payments.