As the United States tackles the Covid-19 pandemic, economic recovery has been fast and strong — but not all Americans are feeling the full effects of the recovery. The United States just reached a record-breaking GDP growth rate, and the population is ready to spend with remaining stimulus checks and expanded tax credits included in President Biden’s economic recovery plans. However, millions of Americans are still suffering the consequences of the breakout of the pandemic at the beginning of last year.
Currently, despite record job growth in February and March, there are still eight million fewer jobs than there were before the pandemic began, and over 2.5 million women were completely taken out of the workforce. People who relied on industries like food service, entertainment, and hospitality are among those most impacted by Covid-19, as these industries still have a long way to go before they make a complete recovery.
Even though signs still point to a recovery from Covid-19 that will leave millions of Americans behind, there is hope that President Biden’s stimulus deals and expanded vaccine rollouts will help speed recovery among groups suffering the most. Biden recently announced a $2 trillion infrastructure spending package that he hopes to pass through Congress and a $1.8 trillion American Families Plan that would introduce federally guaranteed paid leave, two free years of community college, and subsidies on childcare that could help alleviate some of the economic inequality as part of the Covid-19 recovery.
Although some experts and conservatives feel that expanded government spending will only lead to unchecked inflation in the future, other analysts say that increasing spending will improve long-term economic growth and eliminate some of the economic inequality coming to light as the Covid-19 pandemic comes to an end. By offering subsidies on childcare and expanding tax credits, low-income families will potentially be able to make a return to the workforce and help stimulate growth in the economy. The infrastructure plan would similarly boost productivity and create jobs to stimulate further growth.
If conservative analysts are correct about unchecked inflation as a result of increased government spending, then the entire recovery may be at risk as the Fed will need to respond by rapidly raising interest rates. If interest rates stay high for too long, the Fed could inadvertently inflate asset bubbles that would lead to another market crash. Already, conservative analysts say that the Fed is being too generous with low interest rates laying the foundation for a crash in the future.
The Biden administration will need to strike a careful balance between undue government spending and budgeting too little to help all Americans be a part of the economic recovery to counteract unchecked inflation and continue the pattern of rapid growth in the United States. Expanding access to healthcare, offering more stimulus funds to struggling families, and giving more aid to small businesses would all help alleviate some of the inequality caused by the Covid-19 pandemic but would need to pass through heated conservative opposition to increased government spending.