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President Biden’s $ 1.9 trillion coronavirus relief proposal would return the economy to pre-pandemic levels by this summer, according to an analysis released by S&P Global on Monday.
“We find that if the $ 1.9 trillion package were enacted, the US economy would reach pre-crisis levels in the second quarter of 2021, with stronger demand-driven growth through 2023,” indicates the report.
Biden’s proposal would also put the economy on track to move past its pre-pandemic growth path until the end of 2022, when it would start to slow, S&P said.
On the jobs front, S&P said the injection of government funds would likely bring unemployment down to below 4% by mid-2023, a year earlier than its current forecast. The national unemployment rate was 6.7 percent in December, the most recent figures available from the Ministry of Labor.
S&P also analyzed the $ 618 billion COVID-19 relief counter-proposal put forward by a group of 10 Republican senators.
The move would also boost growth, but maintain a weaker growth path over time, according to S&P projections.
“As the policies accelerate to ‘fill the demand gap’ this year, they are temporary, and GDP will come down at a slower growth rate,” the report said.
The report comes on the same day that a Congressional Budget Office report predicted the economic output gap to be $ 808 billion over the next four years, meaning a smaller stimulus package than proposed by Biden might be enough to restore economic growth to its potential.
S&P analysis, however, found that Biden’s proposal would maintain a higher growth path.
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