The new fiscal stimulus passed by Congress in the final days of 2020 likely will strengthen an economic rebound that will occur during the second half of this year.
The program sends a $600 cash stipend to most U.S. adults and adds $300 to weekly unemployment payments for 11 weeks. The plan also extends other unemployment payments, continues eviction bans through January, and revives the Paycheck Protection Program for loans to small businesses.
However, the boost is coming too late to save the U.S. economy from a difficult winter and spring.
Considering the new rounds of lockdown – today, economic growth will drop to 1.9 percent in the first quarter, according to a consensus of economists surveyed by the Wall Street Journal in December. The economists made their gloomy forecast assuming Congress would pass the new stimulus.
The country’s GDP will now grow 5.5 percent this year, according to Capital Economics. The new stimulus prompted the firm to raise its outlook by half a percent point from the 5 percent it had predicted earlier. The stimulus package will add a full percentage point to GDP this year, according to Oxford Economics, which puts 2021’s growth outlook at 4.5 percent.
TRENDPOST: With governments slapping new restrictions on retailers and social gatherings and unemployment claims rising again, the rocky economy is likely to outlast the new stimulus, draining energy out of the economy.
There will be no fundamental economic growth until vaccines are widely distributed and the herd mentality masses who believe in herd immunity feel it is safe to live a “normal” life.
But, overall, the economic future remains bleak. Just today, Boston Mayor Marty Walsh extended lockdown restrictions on gyms, museums, movie theaters, and many other businesses for another three weeks.
