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Biden's $1.9 Trillion Rescue Plan Set To Turbocharge U.S. Economy – NPR

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A pedestrian on Feb. 25 walks past the window of a restaurant with a sign promoting its re-opening in Boulder, Colo. Congress on Wednesday passed a $1.9 trillion stimulus plan, which is expected to provide a strong boost to economic growth.

David Zalubowski/AP

David Zalubowski/AP

The U.S. economy is about to get a shot of its own.

The $1.9 trillion relief package passed by Congress on Wednesday is expected to give a substantial boost to the world’s largest economy once it’s signed by President Biden, putting more money in people’s pockets just as an improving pandemic outlook opens new avenues for them to spend it.

According to the Centers for Disease Control and Prevention, 61 million people in the United States have gotten at least one shot, with 32 million already fully vaccinated.

The rollout of vaccines offers the promise of more normal travel and entertainment options later in the year, further boosting the outlook of an economy already showing signs of improvement.

“The key engine of growth is going to be that powerful cocktail of both a healthier economy along with fiscal stimulus,” said Gregory Daco, Chief U.S. Economist at Oxford Economics.

The Organization for Economic Cooperation and Development projects the U.S. economy will grow by 6.5% this year. That’s more than twice the growth rate it was projecting in December — thanks in large part to more robust federal aid.

Daco himself believes the U.S. economy will grow by 7% this year, while also adding 7 million jobs – a level of growth not seen since about the 1980s.

“It’s been about four decades since we’ve seen such strong growth in real GDP,” he said. “But you have to remember that we’re coming out of a very deep hole when it comes to the damage that’s been done by the COVID crisis.”

A sign is shown at a COVID-19 vaccine site in San Francisco on Feb. 8. The rollout of vaccines is raising the prospect of increased travel and spending by Americans.

Haven Daley/AP

Haven Daley/AP

Also helping turbocharge growth is how President Biden’s plan is structured, according to experts.

The American Rescue Plan — which Democrats pushed through Congress with no Republican support — includes $1,400 payments for most Americans, extended unemployment benefits and increased subsidies for children.

The benefits are heavily weighted towards low- and moderate-income families, in marked contrast to the 2017 tax cut, which Republicans championed on a similar, party-line basis.

Rather than waiting for benefits to trickle down, the COVID relief package showers money on lower-income households, boosting income for the poorest 20% of families by an average of 20%, according to the Tax Policy Center’s analysis, while top earners would see their income rise less than 1%.

Because low-income families are more likely to spend the extra money, it’s expected to provide a significant lift to the broader economy.

“There was a big question about the [2017] Tax Cut and Jobs Act, whether or not it would over time have much of a stimulative effect,” said Howard Gleckman, a senior fellow at the non-partisan Tax Policy Center. “This one, there’s no question. Everyone agrees it will stimulate the economy. The question is will it stimulate the economy too much?”

Lower-income families get the biggest boost from the tax benefits in the American Rescue Plan, in contrast to the 2017 tax cut which primarily benefited the wealthy.

Tax Policy Center

Tax Policy Center

The center’s analysis looked only at the tax provisions of the latest bill, not measures like unemployment benefits or aid to cities and states.

But the question of whether it will prove too stimulative and trigger inflation has raised concerns among other analysts.

Former Treasury Secretary Larry Summers, who served in different positions in the Clinton and Obama administrations, has been one of the most prominent Democratic critics of the plan.

Summers is concerned that with consumer spending already on the rise, a surge in new federal spending could overwhelm businesses, triggering a rise in prices.

“We need to make sure we’re concerned with not overheating the economy,” Summers told NPR’s Weekend Edition last month.

Summers also warned that deficit-financed spending now on a short-term relief package could make it harder for the Biden administration to find money later for long-term investments in things like infrastructure.

The Labor Department said Wednesday that consumer prices had risen just 1.7% in the last year — below the Federal Reserve’s annual target of 2%.

While prices are expected to increase faster in the months to come, Fed officials have said repeatedly they expect that acceleration to be temporary.

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Britain is ‘bouncing back’ into the same old economy – The Guardian

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Britain is ‘bouncing back’ into the same old economy  The Guardian



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CANADA STOCKS – TSX ends flat at 19,228.03

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* The Toronto Stock Exchange’s TSX falls 0.00 percent to 19,228.03

* Leading the index were Corus Entertainment Inc <CJRb.TO​>, up 7.0%, Methanex Corp​, up 6.4%, and Canaccord Genuity Group Inc​, higher by 5.5%.

* Lagging shares were Denison Mines Corp​​, down 7.0%, Trillium Therapeutics Inc​, down 7.0%, and Nexgen Energy Ltd​, lower by 5.7%.

* On the TSX 93 issues rose and 128 fell as a 0.7-to-1 ratio favored decliners. There were 26 new highs and no new lows, with total volume of 183.7 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Nutrien Ltd and Organigram Holdings Inc.

* The TSX’s energy group fell 1.61 points, or 1.4%, while the financials sector climbed 0.67 points, or 0.2%.

* West Texas Intermediate crude futures fell 0.44%, or $0.26, to $59.34 a barrel. Brent crude  fell 0.24%, or $0.15, to $63.05 [O/R]

* The TSX is up 10.3% for the year.

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Canadian dollar outshines G10 peers, boosted by jobs surge

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar advanced against its broadly stronger U.S. counterpart on Friday as data showing the economy added far more jobs than expected in March offset lower oil prices, with the loonie also gaining for the week.

Canada added 303,100 jobs in March, triple analyst expectations, driven by the recovery across sectors hit by shutdowns in December and January to curb the new coronavirus.

“The Canadian economy keeps beating expectations,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “It seems like the economy is adapting to these closures and restrictions.”

Stronger-than-expected economic growth could pull forward the timing of the first interest rate hike by the Bank of Canada, Goshko said.

The central bank has signaled that its benchmark rate will stay at a record low of 0.25% until 2023. It is due to update its economic forecasts on April 21, when some analysts expect it to cut bond purchases.

The Canadian dollar was trading 0.3% higher at 1.2530 to the greenback, or 79.81 U.S. cents, the biggest gain among G10 currencies. For the week, it was also up 0.3%.

Still, speculators have cut their bullish bets on the Canadian dollar to the lowest since December, data from the U.S. Commodity Futures Trading Commission showed. As of April 6, net long positions had fallen to 2,690 contracts from 6,518 in the prior week.

The price of oil, one of Canada‘s major exports, was pressured by rising supplies from major producers. U.S. crude prices settled 0.5% lower at $59.32 a barrel, while the U.S. dollar gained ground against a basket of major currencies, supported by higher U.S. Treasury yields.

Canadian government bond yields also climbed and the curve steepened, with the 10-year up 4.1 basis points at 1.502%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci)

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