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February 9, 2021

Why the US needs to ‘go big’ on relief to prompt economic recovery

By Paul Dennis

9 February

Claudia Sahm, an economist, retweeted an article on the risk of going too big on the Covid economic relief plan as being trivial, as compared to the risk of going too little being significant.

Letting the unemployment shock from the coronavirus pandemic linger for years, rather than having the US Federal Reserve to neutralise the effects of inflation, were too big a risk to take, she added.

Some economists believe that if vaccine rollouts are effective and restrictions are relaxed in the coming year, the economic relief provided during the crisis and Biden’s new Covid relief plan could help the US economy recover at a faster rate and also boost employment levels.

Even though some factors pointed at the economy to be well-poised and unemployment to return to pre-Covid levels sooner than perceived without Biden’s plan, these economists believe it is too big a risk to go small on the spending on relief and recovery measures, as it could encourage the unemployment levels driven by Covid to linger for years.

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