Attention Economy


Friday, February 5, 2021

Fiscal Stimulus Debate - Quest for Full Employment and Risk of Inflation Spike

Biden’s Go-Big Push on Stimulus

The latest version under discussion would send $1,400 payments to individuals earning under $50,000; and $2,800 to married couples earning under $100,000.
https://www.washingtonpost.com/business/2021/02/03/biden-stimulus-checks-what-you-need-to-know/

The Biden stimulus is admirably ambitious. But it brings some big risks, too. By Lawrence H. Summers
https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/


Battle over $1.9 trillion covid relief package is as much about political optics as economic necessity
https://www.washingtonpost.com/business/2021/02/03/democrats-stimulus-covid-relief/
Steven Pearlstein notes:
“The Democrats’ rationale for a $1.9 trillion package — and not a penny less — also reflects a fundamental misconception about the economy and economic policy. Too many have come to believe that government, can control the course of the economy by cleverly turning a handful of dials that have been installed in the basement of key agencies in Washington. This mechanistic conception is a dangerous conceit. Economics is not a hard science, and economies are too complex and subject to too many random events for anyone to say with confidence that anything less than $1.9 trillion would invite economic disaster”.

Economic Policy Makers Double Down on Elusive Goal: Full Employment
https://www.wsj.com/articles/biden-fed-economy-covid-employment-inflation-11612451174
Before the pandemic, low joblessness boosted prosperity without overheating the economy. Getting back there is the top economic aim of the Fed and Biden administration.

Rising Inflation Will Force the Fed's Hand