Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

Covid relief plan focuses on easing poverty to jolt recovery – leading macroeconomic influencers

08 Mar 2021 (Last Updated March 8th, 2021 08:40)

US President Joe Biden’s Covid relief package to give a swift boost to the economy.

Covid relief plan focuses on easing poverty to jolt recovery – leading macroeconomic influencers
Credit: Tada Images, Shutterstock.com.

Economists believe that US President Joe Biden’s Covid relief package, a bottom up strategy to sustain the lowest-paid workers and jobless Americans, can be effective in curbing the coronavirus pandemic and jumpstart the economy.

Austan Goolsbee

Austan Goolsbee, an economics professor at University of Chicago’s Booth School of Business, retweeted a tweet by Heather Boushey – a member of the Council of Economic Advisers at the White House – on how the Senate-approved American Rescue Plan is expected to provide relief to households across the country who have been struggling due to the Covid-induced recession. Economists believe that this is a bottom up strategy for getting the economy on more stable grounds, while Boushey opined that ‘tax cuts for those at the top did not deliver’.

Biden’s $1.9tn Covid relief package seeks to support low earners and the middle class, with less aid for the high earners who have managed to keep their jobs and protected their savings in the past year. It is also expected to lift more businesses and help women and minorities in particular, who have taken an outsize hit during the coronavirus pandemic.

Experts believe that this could be the most effective law and the largest anti-poverty move in a generation. Vast amounts of the federal resources are expected to be infused into the economy. This includes the one-time direct payments of $1,400 for hundreds of millions of jobless Americans, a jobless aid of $300 a week until the end of summer, money to move Covid vaccination rollouts, and provide relief to states and struggling businesses.

Jim Stanford

Jim Stanford, an Director at the Centre for Future Work, tweeted an article by Alison Pennington, senior economist at the Centre for Future Work and author of a new research report on Australia’s recovery. The report stated that the gendered nature of the pandemic recession on the country’s labour market has worsened pay inequality.

According to the report, women had lost more jobs than men when the pandemic hit, declining by almost 8% between February and May 2020, which was more than 2 percentage points worse than for men.

Meanwhile, job recovery has also been gendered. For example, women held 53,000 fewer jobs in January 2021 than last year, while male employment grew by approximately 7,000 jobs.

In addition, women disproportionately returned to work in on a casual and part-time basis, as the economy reopened with easing of restrictions and vaccination efforts.

Ms Pennington further believes that having a job is not enough for women facing historic undervaluation of paid work. The report highlights the expansion of casual work in the industrial relations package, public sector pay caps, and a high-cost inaccessible childcare system which could further widen pay inequality in the year ahead.

Konstantina Beleli

Konstantina Beleli, an economist, retweeted an article by The Economist on how Europe will recover from the economic consequences of the Covid-19 crisis.

Christine Lagarde, the president of the European Central Bank and the former head of the International Monetary Fund (IMF) states why the continent needs more fiscal support in the coming years, why inflation isn’t a problem, and why climate change matters for monetary policy.

She states that Europe’s fiscal stimulus has certainly been lesser than the US.

However, she says that what should not be forgotten is that the Eurozone has several layers, national and regional pan-European layers. Therefore, the European process can sometimes be cumbersome or slow to implement. But she hopes that the funding will be spent in the second half of 2021, with a focus on green and digital.

The pandemic is accelerating everything, as a result, policies need to be accelerated she opines. Lagard points at the further spending of the pandemic emergency purchase programme introduced in March, if required, and it is going to be a while to be worried about inflation. The forecast she says for medium term is 1.4% in 2023, compared to the pre-pandemic levels of 1.6%, which itself was not close to the aim of below 2%.