WALL STREET AND MAIN STREET AGREE: IT’S TIME TO GO BIG

The Wall Street Journal“It is better than the risk of doing too little and spending another decade struggling to escape the shadow of a deep recession.” 

From Wall Street to Main Street, consensus around going big with public investment is overwhelming and widespread.

On Main Street: 

  • 63% of small business owners, including 46% of Republican small business owners, support President Biden’s American Rescue Plan.

  • Financial confidence among small business owners has hit an all-time lowThe American Rescue Plan would provide grants to more than 1 million of the hardest-hit small businesses, and provide $35 billion for small businesses financing programs.

On Wall Street:

  • WSJ: Markets Don’t Think Biden’s $1.9 Trillion Covid Relief Is Too Much

  • President Biden’s relief package would fill any gap in output.

  • “Mr. Blanchard relies on the output gap, the difference between gross domestic product and the economy’s potential, as estimated either by the Congressional Budget Office or by extrapolating pre-pandemic growth. The most he could come up with was a gap of $900 billion, while the CBO estimates a smaller gap of $480 billion by this summer. Either would be instantly filled, and more, by the handouts in the Biden stimulus”

  • WSJ: “Investors are predicting the sort of inflation they like, slightly higher in the next few years but moderating back down after that,” 

Expert macroeconomic analysts agree that President Biden’s Covid plan will spur economic growth: 

  • S&P Global: “In our analysis, President Joe Biden’s proposed $1.9 trillion stimulus package brings U.S. GDP back to precrisis levels by second-quarter 2021, one quarter sooner than our $1 trillion base case.”

  • Brookings: Biden’s $1.9 trillion recovery package would “boost economic activity, as measured by the level of real gross domestic product (GDP), by about 4 percent at the end of 2021 and 2 percent at the end of 2022, relative to a projection that assumes no additional fiscal support.”

  • Moody’s Analytics: “With this additional economic support, real GDP growth would be robust at nearly 8% this year and almost 4% next, bringing the economy back almost to full employment by fall 2022.”

  • International Monetary Fund: “Preliminary estimates show U.S. President Joe Biden’s proposed $1.9 trillion economic stimulus package could boost U.S. economic output by 5% over the next three years.”

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