A $900 Billion Plan Would Help the Economy, but Not Fix It

There is talk about a $908 billion aid package possibly coming in the future. It is a bipartisan framework assembled by a group of senators. Economists have been calling for Congress to approve a stimulus for months. “The economic recovery, slowing for months, is in danger of going into reverse.” By no means is there any final plan for who it is distributed to, but “experts say the plan would provide relief to several battered corners of the economy. It includes nearly $300 billion for small-business aid, $180 billion for unemployed workers, and $160 billion for state, local and tribal governments.” Unfortunately, a plan this small won’t be able to help everyone who needs it, but it is a little boost. Biden said that even if Congress does reach a deal before the end of the year, he will be pushing more spending when he takes office. The package would extend the initial programs set to expire at the end of the year that expanded and extended the unemployment insurance program. Many restaurants and retailers made job cuts in November leading to the weakest monthly gain of recovery in unemployment data so far. At the moment, this plan would be more of a compromise and the goal is most likely to prevent millions of families from losing their income the week after Christmas based on the direction of the economy.

Tankersley, Jim, and Ben Casselman. A $900 Billion Plan Would Help the Economy, but Not Fix It. 4 Dec. 2020, www.nytimes.com/2020/12/04/business/economy/congress-stimulus-economy-impact.html

U.S. economy gains just 245,000 jobs in final report of 2020

  In November, the U.S. economy added 245,000 jobs (Bureau of Labor Statistics) while the unemployment rate fell to 6.7%. This figure fell short from many economists projections of 440,000 jobs.

    This has been most likely caused by the recent surge of Covid-19 cases across the country. State governors have seriously considered implementing a second shutdown, and many have already placed restrictions on bars and gyms. 

    "Today’s report is both a wakeup call and a warning," said Nick Bunker, Indeed economic research director. "Coronavirus cases are surging throughout the country and several federal relief programs are set to expire this month. Progress in the labor market has slowed at the worst possible time. We might be optimistic about the spring, but the winter could bring another round of economic pain."

    Shutdowns are known to slow down business which may reduce employers desire to hire new workers. Do you all believe we will inevitably experience another nationwide lockdown? And what are the long-term effects of shutdowns on bars, restaurants and the airline industry?

https://www.nbcnews.com/business/economy/u-s-economy-gains-just-245-000-jobs-final-report-n1249983

Biden's Limited Options to Revive the Economy

    Heading into the start of his term, Biden will have to take on the tough job of stabilizing and revitilizing the economy. Something, that at the start of his Vice-Presidency, he also had to deal with in 2009. At that time, the economy was in significantly worse shape, though author Greg Ip of the Wall Street Journal argues that the tools he had then far outweigh the tools he will inherit now. For one, when Biden and Obama came into office in 2009, the Democrats controlled both the House and the Senate. This allowed them to aggressively push through stimulus packages and legislation to help get the economy back on its feet. On top of this, interest rates were at a level where they could be lowered to encourage spending and expansion.

    As of now, with the Georgia Senate seats heading to a run-off in January, all the Republicans have to do is win one of these seats to hold control of the Senate. This would leave fiscal policy at the mercy of a deeply divided Congress. Republicans will likely fall back on their hatred of a deficit, stymying legislation packages that will send large stimulus to the American people. On top of this, with interests rates already near zero, much of the monetary available has been exhausted. 

    With the odds seeming very daunting for President-elect Biden, there are some positives in the situation. For one, his nomination for the Treasury Secretary is former head of the Federal Reserve Janet Yellen. If approved, she will be the first practicing economist to hold the position in over two decades. Her knowledge and background will spark a great relationship with current head of the Fed Jerome Powell. Despite his now limited tools, Powell should be very cooperative and helpful to the Biden administration in their efforts.

  How do you see Biden's recovery efforts going? Will a vaccine return things to normal, or will economic recovery have to steered by the new administration?

https://www.wsj.com/articles/biden-to-have-a-better-economy-in-2021-than-in-2009-but-worse-options-11606926003?mod=hp_lead_pos10

If too few people agree to get immunized, the value of a vaccine will be limited

 https://www.economist.com/by-invitation/2020/11/30/katy-milkman-on-how-to-nudge-people-to-accept-a-covid-19-vaccine

According to Katy Milkman, a catastrophe will unfold if too many people reject immunization. 

    With the end of covid-19 being in sight as effective vaccines move closer to approval, society is faced with yet another challenge: encouraging people to take the vaccine for this disease. It is estimated that around 60-80% of the people will need to have taken the vaccine for the U.S to reach herd immunity, however, this past September only 51% of Americans said they would take a covid-19 vaccine when one became available. Two distinct problems must be overcome. First, people who aren't ideologically opposed to vaccines must be strongly encouraged. Second, we need to ensure that people are willing to follow through. As for the anti-vaxxers, they make up a small proportion of the population and can reasonably be written off. 

    There have been many suggestions as to how these problems can be solved. Relying on information, transparency, and encouragement is only the start. Researchers show that people look to their peers for cues on how to behave, therefore the focus must be on emphasizing wide support for the vaccine to those who are on the fence about it rather than the naysayers through public messaging. Moreover, it is also important to make those who have been vaccinated visible to the public to spur others to follow suit. It has also been suggested that those hesitant about the vaccine could be incentivized through traditional mechanisms of mandates and rewards. Requiring students and health care workers would not only follow precedent (influenza), but would also protect them and build community-vaccination norms. 

    There are still many issues that must be resolved before the vaccine is released and a solution to this problem will not only require due diligence but also a little creativity. Nonetheless, the biochemist have completed their work, now it is time for the behavioural scientist to shine. What are your thoughts regarding the vaccine? If not enough people accept to be immunized, the vaccine will be pointless and we will still be stuck with covid. We have already tried lockdowns, and it has proven to be ineffective as people simply do not listen. But, should we as people have to put our long term health at risk by taking a rushed vaccine?

 

Bitcoin Reaches All-Time High

 https://www.wsj.com/articles/bitcoin-hits-all-time-high-of-19-786-topping-record-from-december-2017-11606750573?mod=markets_lead_pos3

Bitcoin, a digital currency sold and bought online, just hit a record high of $19,786.24. This new record surpassed the previous one, set in December 2017, and marks a tripling in value in 2020 and an almost doubling in price since September. This rally comes alongside high performance in the stock market, as the Dow recently reached a record 30,000 points. Market jubilation comes as the result of the Federal Reserve’s inpouring of capital into markets, along with hopes for a Covid vaccine in the near future. Because of this anticipation, bond yields are low, as investors are willing to put their money in more risky assets: chief among which is Bitcoin, an asset known for its volatility. Additionally, services like Cash App and Robinhood (retail investment platforms) that sell stocks as well as bitcoin contribute to high asset prices. 

It will be interesting to see how the price of Bitcoin and the Dow change in the next month. Although BioTech companies have been scurrying to get the FDA to approve their vaccines, it is unlikely a vaccine will be widely available before the Spring. After some point, investors may be sick of waiting for the anticipated normalcy and these high stock prices may prove artificial. It is also likely that the advent of popular investment apps, such as Cash App and Robinhood, which make it easier for young people and first-time investors to invest, will contribute to cause high stock prices, as this larger base of investors pour into a wider range of stocks, even those that would not receive as much attention without the accessibility these apps provide.