February 23, 2021
Just in case you are getting nostalgic for the past few years, we began 2021 with an impeachment trial and a debate concerning the size and need for a stimulus package. Sound familiar? And because this commentary is focused upon economics and not politics, we are more concerned with the arguments for and against stimulus. On one side of the equation, some are arguing that the economy is going to roar back after we are vaccinated, and not only is stimulus not needed, but we run the risk of an overheating economy.
A strong economy could raise interest rates and would exacerbate our already humungous deficits as the cost of government borrowing would soar. On the other side of the equation, we can point to ten million jobs which have been lost during the course of the pandemic. And when you figure that we should have created two to three million jobs in the past year, we are actually at a net loss of at least twelve million jobs.
We are definitely experiencing a “K” shaped recovery in which some sectors (real estate and the wealthy) are thriving, while others like travel and dining are hurting. Those from the lagging sectors are struggling and need help. So, who is right? That is where we come back to politics. Last year, the conservative viewpoint had the upper hand. This year the political tides have turned. The question is whether both sides will come together with a package of compromise.
Source: Origination Pro
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