Economic survival package needed rather than a stimulus package for the US, according to leading macroeconomic influencers

4 August 2020 (Last Updated August 4th, 2020 07:21)

Economic survival package needed rather than a stimulus package for the US, according to leading macroeconomic influencers

The next stimulus package in the US is one of the most debated issues as to what should be included and what should be avoided. While experts argue that the weekly supplements to unemployment benefits should continue some politicians claim that they are discouraging people to search for jobs, macroeconomic influencers share their views on the Covid -19 impact.

Dean Baker

Dean Baker, senior economist at the Center for Economic and Policy Research, shared an article on how the government should focus on an economic survival package rather than a stimulus package.

The government is yet to take a decision on the next stimulus package with politicians claiming that unemployment benefits are discouraging people from going back to work. With the infection rate being at high levels, people have good reason to stay at home and avoid getting infected.

The article notes that the next stimulus package should not be focussed on getting people back to work rather it should focus on taking care of their needs in every way during the pandemic. Continuation of the $600 weekly payments, reopening of schools, and ensuring adequate child care facilities is important to ensure economic recovery.

Pedro da Costa

Pedro da Costa, a journalist, shared an article on how emergency financial assistance can be released more quickly to the American population if the government changes a simple rule.

The current method of direct payments as part of the stimulus package took nearly three weeks to reach the people and is not helping the families in need. Further, the overdraft fees and bank interest rates cut in the money provided by the government.

Incorporating changes to the Expedited Funds Availability Act of 1987, which covers how long a bank can hold money will help address this issue. The changes can help in releasing funds immediately and does not cost anything for the government.

Prof. Steve Hanke

Prof. Steve Hanke, economist at Johns Hopkins University, shared an article on former Vice President Joe Biden’s calls for increasing the minimum wages in the US to $15 per hour. He noted that increasing the minimum wage will leave 1.3 million low-skilled workers to become unemployed, according to the Congressional Budget Office (CBO).

The CBO report found that the increase in minimum wages can, however, boost the wages of 17 million workers although it does not take into account the current economic impact of the pandemic. The US Chamber of Commerce supports increasing the minimum wages to $10, which may result in a smaller number of job losses.

Increasing minimum wages and unemployment benefits can increase consumer demand, which will ultimately help businesses when they reopen after the pandemic.

Howard Archer

Howard Archer, chief economic advisor to EY ITEM Club, shared an article on the increase in manufacturing activity in the UK to a 16-month high of 53.3 in July. The increase was driven by expansion in consumer intermediate goods sectors as lockdown restrictions were eased.

The numbers indicate that the UK economy is expected to return to growth in the third quarter assuming no new lockdown restrictions are imposed. Growth in the fourth quarter, however, is projected to slowdown due to increase in unemployment.