COVID-19 stimulus plan to help troubled U.S. economy recover from pandemic hardships, says economist
The expected House vote to pass the $1.9 trillion Covid-19 stimulus bill before heading to the Senate is a positive step forward in helping the troubled U.S. economy, but Virginia Tech economist Kwok Ping ‘Byron’ Tsang says we still have a ways to go before we recover from the enormous economic loss during the pandemic.
“Unlike a typical recession, the pandemic led to a drastic slump of the U.S. economy, but the bounce-back was equally strong,” says Tsang. “If we look at macroeconomic data, we see that the unemployment rate has gone down quite a bit, and the economy has not shrunk as much in 2020 as predicted.”
“The U.S. economy however is still in trouble and the trouble is rather uneven - some sectors are still in halt, some jobs are still not coming back, and some regions are more affected than others,” says Tsang. “A stimulus now is justified. Also, we still don't see much inflation and interest rates are low, and the risk of "overheating" the economy is rather low.”
“Some critics worry about having too much national debt with the amount of spending in the stimulus package, however I would say that we are more like using our credit card, with low interest rates, to get ourselves through some temporary hard times. When the economy is back on track and income grows again, we will be able to pay that back.”
In a previous research study, Tsang and his research team looked at the economic loss of stay-at-home orders in place during the COVID-19 pandemic. The 2020 study not surprisingly found that the entertainment, leisure and hospitality sector was hardest hit, followed by the manufacturing and retail trade sectors. Read more about the study here.
Kwok Ping ‘Byron’ Tsang is an associate professor in the Department of Economics, part of the Virginia Tech College of Science. He is also a faculty fellow with the Global Forum on Urban and Regional Resilience at Virginia Tech and a member of the Hong Kong Institute of Asia-Pacific Studies’ Economic Research Centre. His research focuses on housing economics, macroeconomics and finance, and monetary history. Among his more current works is studying the market of bitcoin interactions.
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