The US economy may require trillions of dollars in stimulus to over the economic downturn, according to leading macroeconomic influencers

27 July 2020 (Last Updated July 27th, 2020 07:40)

The US economy may require trillions of dollars in stimulus to over the economic downturn, according to leading macroeconomic influencers

Additional stimulus to deal with the impact of the Covid-19 pandemic in the US will be required over the next few years. Sectors such as child care have been impacted by the pandemic leaving parents vulnerable to lower incomes in the future. Automatic stabilisers are required within the stimulus packages to ensure long-term effectiveness, macroeconomic influencers share their views on the Covid -19 impact.

John Van Reenen

John Van Reenen, professor at MIT Economics, shared an article on the next stimulus package being considered by the US government. Although politicians project that the US economy may require $3tn in stimulus, macroeconomists highlight the need to incorporate automatic fiscal stabilisers.

Unemployment benefits under the CARES Act are set to end in July although experts have called for an extension of the benefits. As jobs are yet to return to normal levels, unemployment benefits are essential to protect households from bankruptcy.

Anthony DeRosa

Anthony DeRosa, a journalist, shared an article on the impact of the Covid-19 pandemic on the child care system in the US. The article notes that the economic impact of the collapse of the system will be visible for the next 20 to 30 years.

Both parents in approximately two thirds of families in the US work apart from majority of the 13.6 million single parents, according to the Bureau of Labor Statistics. The lack of child care facilities is forcing some of these parents to quit or switch to part time jobs, which is expected to significantly impact their income over the rest of their lives.

The article notes that more stimulus was injected to save airlines rather child care, which is expected to impact a whole generation of children and their job prospects.

Gregory Mannarino

Gregory Mannarino, a financial expert, shared an article on President Donald Trump’s economic advisers expecting a V-shaped recovery despite the surge in cases and rising unemployment rates.

The projections are based on the increase in sales of existing homes by 20.7% in June apart from a slow decrease in unemployment rolls as employers call back workers. Federal Reserve officials are taking a cautious approach before announcing the next economic stimulus to better understand the full impact of the pandemic on the economy.

Treasury Secretary Steven Mnuchin noted that the US economy may witness a 17% economic growth in the third quarter.

Howard Archer

Howard Archer, Chief Economic Advisor to @EY_ITEMClub, shared an article on how the UK economy may not recover from the contraction caused by the Covid-19 pandemic until 2024. The UK GDP is expected to decrease by 11.5% rather than the previously predicted 8%.

Despite easing of lockdown restrictions and surge in retail sales, consumer caution are increased and may take at least 18 months to return to pre-Covid levels.