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Macro Focus: Economic Impact of the $1.9 trillion American Rescue Plan

An unprecedented fiscal support

As of April 2021, the United States leads by a wide margin the Discretionary Fiscal Response to the COVID-19 Crisis enacted by the world's Advanced Economies, especially when it comes to straightforward fiscal measures comprising additional spending and forgone fiscal revenue.

Source: IMF

As in other countries, the US fiscal policy response to the COVID-19 pandemic took two forms: 

  1. Disaster-related Relief measures: These measures were designed to help prevent business failures and sustain the unemployed directly affected by the COVID-19 pandemic and the sanitary restrictions that were put in place to contain its spread. The sheer magnitude and the synchronised nature of the pandemic put it appart from natural disasters which are usually localised in time and space. This warranted early on, an unprecedented fiscal support, illustrated by the CARES Act and the Paycheck Protection Program (PPP).
  2. Traditional Stimulus measures: these policies and support measures aim at stimulating aggregate demand and speeding up employment recovery. They are broader in scope and less directed to support specifically certain businesses, sectors, or individuals. These measures include spending on education, healthcare and infrastructures.

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