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February 12, 2021

US headed towards new unemployment protection laws – leading macroeconomic influencers

Economists believe that the appointment of Michele Evermore to the US Labour Department is a key decision.

Michele Evermore is key in implementing President Biden’s directive for DOL, to clarify guidelines pertaining to guaranteed unemployment benefits and assist states struggling to efficiently pay claims during the pandemic.

Dr Malini Nair

Dr Malini Nair, an economist, shared an article on the Biden administration appointing unemployment insurance guru Michele Evermore to the US Labour Department to address the significant increase in unemployment insurance claims due to the coronavirus pandemic.

Evermore, the newly appointed DOL senior policy advisor on unemployment insurance, has been constantly working with state agencies, the Congress, and the Capitol Hill, for providing expanded benefits payments to a wider section of the American population who are unable to work during the pandemic-induced recession.

Latest DOL data has revealed that initial filings for state unemployment programmes decreased to 793,000 during the week ending 6 February 2021. The number of claims for federal Pandemic Unemployment Assistance, covering independent contractors, rose to 8.7 million during the week ending 23 January 2021.

Adam Ozimek

Adam Ozimek, an economist, retweeted an article on a better criticism of Biden’s Covid relief plan. According to experts, the inflation and overheating argument is incorrect, but the Covid rescue plan is likely to have a really low multiplier. In other words, it was not about a huge relief amount sparking inflation, but the fact that it maybe wasteful and not strictly needed.

According to economists, during recession such as the Great Depression and Covid, a high multiplier means that it’s good to borrow money even if the debt increases because the return on investment is really high. Additionally, giving money to the poor is also seen as a high multiplier activity, while regressive tax cuts have a low multiplier.

Some experts are of the opinion that the Biden coronavirus rescue package does not appear to be a very high multiplier initiative. This argument extends from the fact that a huge amount of this Covid money will address supply-side issues as well such as virus testing, vaccination programmes, and genetic surveillance. However, the main concern for policymakers is that these buckets of money are going to the state and local governments and that the survival cheques may not be spent so quickly as expected.

Therefore, for some states like New York, Florida, and Nevada, ones that rely on sales tax revenue from commuters, will immediately benefit from the money. However, states like California that is looking at a $15bn budget surplus from a soaring stock market and the state’s progressive income tax, the extra money will only add to the bank accounts of the employed to squander.

https://twitter.com/ModeledBehavior/status/1360042062771544064

Roger E A Farmer

Roger E A Farmer, an economist, retweeted on post-Covid inflation risks for the UK. The panel of experts at the Centre for Macroeconomics have been split between predicting that the UK inflation will be at its current target and those who believe that inflation will be above the target in the upcoming years.

Experts are considering additional factors such as the effects of Brexit, global factors, and rising public debts, in determining inflation post the pandemic. New arguments have emerged regarding the concerns around inflation. For example, a Ilzetzki et al. (2020) research argues that monetary forces will have more of an inflationary bias because of the Covid crisis. In addition, disruption in global supply chains, which Eastern Europe has been highly reliant on, will experience potential inflationary threat.

Surveys of inflation for 2021 indicate an increase in inflation expectations, with household inflation to be at 3.8%. Some experts agree that the UK, in particular, will struggle with inflation early in the decade due to Brexit and Covid costs into a labour market with a lot of mismatch as different sectors and places will flourish and fade.

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