US President Joe Biden at the Climate Summit: The government wants more than $ 2 trillion in infrastructure investments to build a “future economy” (Al Drago-Pool / Getty Images)
Good time may not be everything. But it definitely helps.
This appears to be the case when it comes to the initiative of the President of the United States, Joe Biden, to reverse decades of worsening economic dynamism. While Biden’s efforts alone are expected to yield limited results, they have arrived at a time when some economists believe the United States is ready for a stronger, sustainable growth race.
After more than a year of corporate restrictions and social disconnection aimed at slowing the spread of COVID-19, companies are ready to increase efficiency and employees are eager to return to work – which could mark the beginning of a long period of faster productivity advancement and workforce expansion.
“We have to catch up with a lot,” said Robert Gordon, a professor at Northwestern University and author of the 2016 book, after a decade of declining productivity growth. The Rise and Fall of American Growth.
Biden has already paved the way for a lightning-fast economic recovery this year and next, distributing incentive checks under the $ 1.9 trillion U.S. payment plan. What it seeks to do with the next two packages is even more difficult: increasing the ability of the economy to expand for an extended period without generating hyperinflation.
Since 2000, the country’s GDP has expanded at an average rate of 2% per year, compared to the expansion of 3.3% in the past 20 years. While this faster rate may be elusive now due to an aging population, some increase in potential is possible with the right policies.
Biden’s “$ 2.25 trillion US employment plan” aims to boost long-term growth by dramatically increasing infrastructure spending to expand productivity, such as broadband coverage and improving transport connections.
The next “American Family Plan” will focus on increasing the number of Americans – especially women – available for work, by increasing funds for childcare, education, and other government programs.
Both proposals should be funded by higher taxes on corporations and the wealthy, something some economists say will affect growth. Investment and expansion of the workforce is expected to more than compensate for it.
Spending plan to boost GDP
A particularly encouraging result, according to JPMorgan Chase chief economist in the US, Michael Ferroli: Companies have increased their investments.
After the downturn in the second quarter of last year, with the economy practically paralyzed, the company’s spending on equipment increased at a pace of 25.4% in the fourth quarter, in addition to a 68.2% jump in the previous three months, after five consecutive quarterly declines. .
The US family plan, due to be announced next week, is also expected to have little but positive impact on the economy’s potential long-term growth rate, in the region of roughly 0.1 percentage points per year, according to Mark Zandy, chief economist at Moody’s Analytics.
– In cooperation with Carol Massar.
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