Economists believe that the US economy to will surge forward for most of 202, driven by the accelerating pace of Covid-19 vaccinations. However, policymakers must press ahead with measures to include robust, sustainable, and a more inclusive long-term growth.
Mohamed A El-Erian
Mohamed A El-Erian, president of Queens’ College, Cambridge and chief economic adviser at Allianz, shared an article on the bounce back of the US economy in 2021 with more fiscal boost, more monetary stimulus, higher private savings, pent-up household consumption, and fewer health restrictions. President Biden’s announcement of the country having enough Covid-19 vaccines for every citizen by the end of May has led to a rising optimism in the country’s economic prospects, Erain noted.
Latest data from the pandemic suggests that personal income grew by 10% between December and January, manufacturing expanded by nearly ten percentage points year-on-year, and 379,000 jobs were created in February this year. Consequently, the Federal Reserve Bank of Atlanta’s GDPNow model has now estimated the annualised first-quarter GDP growth to be around 10%.
Experts state that the economic pickup is being driven by the pent-up demand, both in the US and globally, and due to the fiscal stimulus package that the Congress approved at the end of 2020. In addition, public- and private-sector effects are likely to become more visible with the rapid pace of vaccinations, and Biden’s two-stage rescue and recovery plan.
With another fiscal boost, more monetary stimulus, higher private savings, pent-up household consumption, and fewer health-related restrictions — the US economy will sprint for most of 2021. What comes thereafter is not yet pre-destined however:https://t.co/VVI1hhLUx3
— Mohamed A. El-Erian (@elerianm) March 12, 2021
US economist Stephanie Kelton, a professor at Stony Brook University, retweeted an article on the income and liquid asset trends during the Covid-19 crisis. According to new data from JPMorgan Chase Institute, about 22% of renters in the US saw their total income fall by more than 10% in 2020, despite government assistance from unemployment and stimulus checks.
The study revealed that renters received unemployment insurance (UI) a higher rate than mortgage holders during the pandemic, indicating greater job loss during the coronavirus pandemic. A Census Pulse survey further confirmed that 43% of homeowners experienced loss of employment income during the virus crisis, as compared to 59% of renters.
Data also found that renters had less savings than mortgage holders before the pandemic hit in March 2020. However, despite an overall increase in savings for renters and homeowners, primarily attributed by the disbursement of economic impact payments (EIP) cheques in mid- April, renters exhausted 75% of their additional savings compared to homeowners’ 46% by the end of the year.
22% of renters saw their total income fall by more than 10% last year, even after government assistance from unemployment and stimulus checks.
— Heather Long (@byHeatherLong) March 11, 2021
Danae Kyriakopoulou, Chief Economist and Director of Research at the Official Monetary and Financial Institutions Forum, shared her article on The European Central Bank (ECB) playing a critical role in supporting the economy during the pandemic, but now having to consider the challenges lying ahead its strategy review, which is most likely to reignite tensions within its governing council.
Although the debate on inflation revival has resurfaced in view of the size of the pandemic stimulus in the US, the ECB’s aim of inflation ‘below, but close to, 2%’ may not be fit for purpose. Experts have stated that if the ECB is not meeting its target, it will lose credibility.
The pandemic has also prevented serious discussions of ‘normalisation’ and balance sheet unwinding. However, experts opine that the closer Europe gets to recovery, the more pressing these questions will become, and that the announcement of the review’s conclusions will see the beginning of genuine economic recovery.
The @ecb has been key in supporting the economy in the pandemic. Commitment today to pick up PEPP pace shows it's come a long way a year after @Lagarde 'not here to close the spreads' statement. But challenges lie ahead as it plans its review -THREAD 🧵https://t.co/t2B4rlZ4Ix
— Danae Kyriakopoulou (@DKyriakopoulou) March 11, 2021