While some economists argue that the Biden economic rescue plan is maybe going too far, others believe that providing immediate relief measures, such as this, is important to bring the economy back to low unemployment levels and restore public confidence.
Claudia Sahm, an economist, retweeted an article on the risk of going too big on the Covid economic relief plan as being trivial, as compared to the risk of going too little being significant. Letting the unemployment shock from the coronavirus pandemic linger for years, rather than having the US Federal Reserve to neutralise the effects of inflation, were too big a risk to take, she added.
Some economists believe that if vaccine rollouts are effective and restrictions are relaxed in the coming year, the economic relief provided during the crisis and Biden’s new Covid relief plan could help the US economy recover at a faster rate and also boost employment levels.
Even though some factors pointed at the economy to be well-poised and unemployment to return to pre-Covid levels sooner than perceived without Biden’s plan, these economists believe it is too big a risk to go small on the spending on relief and recovery measures, as it could encourage the unemployment levels driven by Covid to linger for years.
The risk of going too big on economic relief is trivial—a period of inflation that the Federal Reserve is well-equipped to neutralize. The risk of going too small is large—letting the unemployment shock from COVID-19 linger for years, says @joshbivens_DC. https://t.co/84Fi2LWtTs
— Economic Policy Institute (@EconomicPolicy) February 8, 2021
Stephany Griffith Jones
Stephany Griffith Jones, an economist, retweeted an article on African countries facing several challenges to industrialisation, especially in the face of the Covid-19 crisis. Dani Rodrik, an economist and author of the article, further writes that recent patterns of technological change in the richer countries have made it even more difficult for low-income countries to develop and converge with income levels in the developed world.
Experts opine that industrialisation and integrating with global value chains are essential for economic growth and restoring Africa after Covid-19 and creating more jobs for the young population.
However, despite Africa’s manufacturing rebirth, few jobs have been created in modern, formal, and productive manufacturing divisions. In fact, the number of formal jobs has become stagnant, with the bulk of manufacturing employment coming from small and informal enterprises.
New piece @rodrikdani on African industry
➡️but tech is too capital intensive given labour abundance https://t.co/ysKTAs4Fum
— Dirk Willem te Velde (@DWteVelde) February 8, 2021
David Beckworth, a senior research fellow at the Mercatus Centre at George Mason University, shared a podcast interview with Robert Kaplan, the CEO and of the Federal Reserve Bank of Dallas, on the Fed’s new framework, inflation, and post-Covid economy.
According Kaplan, the pandemic has increased the level of acceleration of technology enabled disruption. This has been on account of the fact that a lot of things previously conceived to be not possible through technology can now be achieved with technology.
For instance, the pandemic has become a catalyst for online innovations as people stay indoors and turn to remote working trends. He is also of the opinion that jobs related to personal services, personal contact, and others are being disrupted and are being eliminated by technology. Therefore, re-training would play key role in determining productivity and income levels of these workers.
A great show today with @RobSKaplan of the @DallasFed. We covered a lot of ground, including what 'moderately above' in the AIT framework means to him (2.25-2.5%), NGDP targeting (he is a fan!), the next Fed review, the Fed's balance sheet, and more! (1/2) https://t.co/5nPhIc8Efl
— David Beckworth (@DavidBeckworth) February 8, 2021