Workers not getting enough stimulus help is a larger concern than potentially overheating the economy, officials say.
As President Biden moves forward with plans for a $ 1.9 trillion stimulus package, he and his top economic advisors aside, warning that working aggressively to stimulate the struggling economy will leave the nation in the 1970s The infuriating monstrous price rise will bring a return.
Inflation predictions over the years that had failed, those who run fiscal and monetary policy in Washington judged the risk of “overheating”, far less than the risk of failing to adequately heat the economy .
Democrats in the House spend this week finalizing Mr. Biden’s stimulus proposal aimed at holding a floor vote early next week, pumping nearly $ 2 trillion into Americans, including direct checks and more generous unemployment benefits. Give. The proposal is expected to be taken up quickly as soon as the Senate approves the House, in hopes of sending the final bill to Mr. Biden’s desk early next month. Federal Reserve officials have indicated that they planned to buy near-zero rate and government-backed loans to curtail growth.
Federal Reserve, Chairman Jerome H. Under Powell, and the administration are staying the course despite growing resentment from some economists across the political spectrum, including Lawrence Summers, a former Treasury secretary and top adviser to the Clinton and Obama administrations, who say Mr. Biden’s plans are rising Can think about prices.
There is no better symbol of a sudden breakdown of decades of concern over inflation – in Washington and the elite fields of economics than Janet L. Yellen, former Federal Reserve chair and current Treasury secretary. Ms. Yellen has spent the bulk of her career fighting in the war against inflation that economists have been struggling for more than half a century. But at a time when the US economy has fallen below its pre-pandemic levels by 10 million jobs, and millions face hunger and evictions, she appears ready to move forward.
In the protected language of the Fed Chair, Mr. Powell used a speech last week to back the idea that the economy was in danger of overheating. He said prices could show a brief pop in the coming months, as they rebound from very low readings last year, and added that the economy could see a “burst” of spending and temporarily high inflation when It opens completely again. But he said he expected such an increase to be short-lived – not a continuous spiral that many economists worry about.
There is a small but influential group of economists Question that scene – In particular, Mr. Biden was called upon to withdraw his economic aid plans, including sending direct payments to most American families, increasing the size and duration of benefits for the long-term unemployed, and large spending to accelerate Kovid vaccine deployment. Is included. country.
They argue that the size of the package of coronovirus has drained the economy of the package. With so many dollars chasing a limited supply of goods and services, the argument goes, purchasing power may decrease or the Fed may suddenly need to raise interest rates, which could send the economy back into recession. .