While the German government is in crisis mode and in lockdown planning, the US government is increasingly talking about the prospects after Corona. US Treasury Secretary Janet Yellen has given a very optimistic forecast for the US economy for 2022.
After the $ 1.9 trillion stimulus package was passed, she was confident “that people will reach the other side of this pandemic with their livelihoods intact,” Yellen writes in a paper for the US House of Representatives Committee on Financial Services. “And I think they will be welcomed by a growing economy there. I even believe that we will see a return to full employment in the next year, ”it said.
The finance ministry announced last week that it would begin disbursing aid from the stimulus package within around 60 days.
Federal Reserve Chairman Jerome Powell also told the committee that the recovery was progressing faster than generally expected. Household expenditure has increased and the housing sector has even more than returned to its former strength.
The industries that suffered the most from the coronavirus remained weak, Powell admitted. The labor market has not yet reached the pre-crisis level. According to the US Federal Reserve, around ten million Americans need a job again.
Powell promised that the central bank would use all available instruments to support the economy. They will ensure that the recovery from this difficult period is as robust as possible.
The US Federal Reserve expects the strongest upswing since the 1970s for 2021, when US President Joe Biden’s aid program stimulates consumption and the vaccination campaign takes effect.
Small companies could shut down en masse
But despite the recovery, Fed central banker Michelle W. Bowman warns of a massive wave of small business bankruptcies across the country. “Financial pressures remain on many small businesses, and I am concerned that growing numbers of small businesses have already closed permanently or are on the verge of failure,” Bowman said at a business meeting in Oklahoma. Many banks had told her “that the Paycheck Protection Program (PPP) and other fiscal measures only postponed this financial pressure, but did not remove it.”
The US monetary authorities had seen the restrictions to contain the coronavirus as the only sure way to economic recovery and supported fiscal aids such as the PPP and loans to small businesses. In Bowman’s view, the restrictions could now lead to a wave of bankruptcies. “These restrictions may have been helpful in containing the pandemic, but they appear to have disproportionately impacted the ability of smaller firms to maintain their operations and sources of income, creating significant cash flow pressures,” Bowman said.
The PPP aid program originally had a volume of 660 billion dollars and was initially in high demand. It is intended to support small and medium-sized companies in times of crisis so that the companies can keep their staff.
Reports on further economic stimulus program
US President Joe Biden wants to use the so-called American rescue plan to intensify the fight against the pandemic and its economic effects and to help US citizens and companies in need. The package of measures includes checks for $ 1,400 for millions of citizens, aid for the unemployed and billions for vaccinations and corona tests.
According to US media, Biden is planning another large-scale investment program. Expenditures totaling three trillion dollars are planned, including for the expansion of the infrastructure.