New growth drivers for US economy

Friday, 2021-04-02 09:52:27
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US President Joe Biden speaks prior to signing the “Paycheck Protection Program (PPP) Extension Act of 2021” into law, on March 30, 2021. (Photo: Reuters)
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NDO – Along with the growth momentum from the “coverage” of COVID-19 vaccines, the US economy now has an opportunity for strong development thanks to a series of stimulus policies introduced by the administration of President Joe Biden.

Following a US$1.9 trillion relief package to overcome the consequences of the pandemic, the US government has announced an array of important plans and policies to create a growth engine for the world’s no. 1 economy. Accordingly, on March 31, President Biden released a huge spending plan, worth more than US$2 trillion, aiming to modernise the infrastructure system and deal with climate change. In the first phase of the plan, the US will upgrade more than 32,000 kilometres of roads and 10,000 bridges, extend broadband access to rural and underserved communities, upgrade the national water pipes, and increase investment in research, development and production. The trillion-dollar plan is expected to boost the US’s competitive advantage in the international arena and create more high-paying jobs for middle-class workers. In addition, President Biden affirmed that now is the time to pass the American Jobs Plan aiming to overhaul a “distorted and unfair” economy, as well as to help the US compete against other countries.

The growth driver and outlook of the US economy have also improved thanks to the acceleration of the campaign to extend the COVID-19 vaccine coverage, revitalise the tourism industry and support enterprises. The US is currently administering 2.5 million doses of vaccine per day and is aiming towards vaccinating the majority of the population by its Independence Day (July 4), thereby creating a foundation for the tourism sector to prosper. Statistics of the US National Highway Traffic Safety Administration showed that 1 to 1.5 million people have been travelling by air every day since mid-March. The number is still less than 50% of the figure from 2019 but has improved significantly compared to the peak of the COVID-19 outbreak in the US. American travel businesses are optimistic about the industry’s recovery prospects thanks to the immunisation campaign. The results of a new Longwoods poll showed that 87% of US tourists plan to travel in the next six months, the highest level since the pandemic broke out in the country last March. In addition, only one third of those surveyed said that the COVID-19 situation would greatly affect their decision to travel in the next six months, the lowest level in the last year.

Another important factor supporting US economic growth in the coming time is that President Biden recently signed a law on extending the COVID-19 bailout programme to rescue small-sized enterprises from the current state of misery. The relief bill passed with overwhelming votes will extend the deadline for business owners to apply for forgivable loans through the Paycheck Protection Programme (PPP), giving applicants an additional two months to apply for federal aid (from March 31 to May 31). The bill will also allow the Small Business Administration (SBA) to have until June 30 to process the applications. US media said that, along with the business support program, the US$1.9 trillion relief package signed into law by President Biden has provided additional capital for the PPP to support small businesses. According to the SBA, about US$79 billion of the package has been earmarked for this loan programme.

The drastic policies to support economic growth have made the US economic growth prospects brighter and helped to boost consumer confidence in the world’s no. 1 economy. According to a recent survey of research organisation Conference Board, the consumer confidence index in the US rose 19.3 points to 109.7 points in March, the highest level since the pandemic broke out exactly a year ago. It is also the strongest increase since April 2003. Meanwhile, the latest forecasts of financial institutions and analysts are optimistic about the US economy. Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said that there are more and more signs for a speedy recovery in the world, with the US economy forecast to grow strongly later this year. Director of the US Federal Reserve (FED) Jerome Powell also stated that the recovery momentum of the US economy “seems to be strengthened”. The FED predicted that the US economy will grow 6.5% in 2021, the highest rate since 1984, and the unemployment rate will drop to 4.5% by the end of the year.

With the important growth drivers mentioned above, the picture of the US economy is getting brighter and brighter. However, according to the head of the IMF, in general, the global economic outlook is still “overshadowed by many uncertainties” when economic activity depends on the pandemic situation, the progress of vaccination and the appearance of new coronavirus variants. In such context, fighting the pandemic and restoring economic growth remain the “dual tasks” of constant concern for the administration of President Joe Biden.