According to an analysis published by S&P Global on Monday, President Biden’s proposal to alleviate $ 1.9 billion in coronavirus will restore the economy to pre-pandemic levels.
‘We find that if the $ 1.9 billion package is enacted into the law, the US economy would reach a level before the crisis in the second quarter of 2021, with stronger demand-driven growth by 2023, ‘reads the report.
Biden’s proposal will also move the economy on course to exceed its growth path ahead of the pandemic until the end of 2022, when it will start to slow down, S&P said.
In terms of jobs, S&P said that the injection of state funds is likely to bring unemployment to below 4 percent by mid-2023, a year earlier than the current estimate. The nationwide unemployment rate stood at 6.7 percent in December, the latest figures available from the Department of Labor.
S&P also analyzed the $ 618 billion counter-proposal for the COVID-19 relief presented by a group of ten Republican senators.
According to S & P’s forecasts, it will also increase growth, but maintain a lower growth path over time.
“While the policy this year accelerates the ‘filling in the demand gap’, it is temporary, and GDP will drift back to a slower pace of growth,” the report said.
The report comes on the same day that a report from the Congressional Budget Office predicted that the economic output gap would amount to $ 808 billion over the next four years, which means that a smaller stimulus package than the one proposed by Biden would be enough to to restore economic growth to the potential.
However, the S&P analysis found that Biden’s proposal would maintain a higher growth path.