According to an analysis published by S&P Global on Monday, President Biden’s $ 1.9 trillion coronavirus fight proposal would return the economy to pre-pandemic levels by this summer.
“We see that if the $ 1.9 trillion package were to be legislated, the US economy would reach pre-crisis levels in the second quarter of 2021, with a stronger demand-driven growth path through 2023,” the report said.
Biden’s proposal would also put the economy on track to outpace its pre-pandemic growth path until the end of 2022, when it would start to slow, S&P said.
In terms of jobs, S&P said the injection of government money would likely push unemployment below 4 percent by mid-2023, a year ahead of current forecast. The nationwide unemployment rate was 6.7 percent in December, the most recent figures available from the Department of Labor.
S&P also analyzed the $ 618 billion counter-proposal for COVID-19 aid offered by a group of 10 Republican senators.
This measure would also stimulate growth, but according to S&P projections, it would maintain a slower growth path.
“While policy this year is accelerating the ‘filling the demand gap’, it is temporary and will push GDP back to a slower growth rate,” the report said.
The report comes on the same day that a Congressional Budget Office report predicts that the economic output gap would reach $ 808 billion over the next four years, meaning that a smaller stimulus package than the one proposed by Biden could be enough to rebuild economic growth. growth back to potential.
However, the S&P analysis showed that Biden’s proposal would sustain a higher growth trajectory.