The geoeconomics of Biden’s stimulus

It’s a done deal. Congress just passed Joe Biden’s American Rescue Plan, sending the $1.9 trillion package—the sixth stimulus since the COVID-19 outbreak and one of the largest economic-relief measures in US history—for the president’s signature. Don’t be fooled by the bill’s name, though; this legislation has huge implications not just for the United States but also for the pandemic-plagued world. Let’s break that down with our experts.


  • Before we get to the wider world, it’s worth taking stock of where this leaves the US economy. The stats are stunning. With this latest bill, Joshtells us, the United States “will have spent over 25 percent of its GDP—nearly $5.5 trillion—in the last twelve months on COVID-related relief. Compare that to 2009, when the US spent under $1 trillion. According to the OECD, America is now on pace for 6.5 percent growth in 2021 (some private banks are forecasting over 7 percent). This would be the highest growth rate since 1984. In fact, US growth could surpass China’s growth this year. You read that right.”
  • Economists are forecasting that major US trading partners such as Germany, France, Japan, and China “will benefit from Americans having more money to spend” as a result of the new stimulus, he notes. “But the Biden team is wary of being solely responsible for restarting the global economic engine. They want the Europeans to try to match US efforts, or at least come close, to create a ‘virtuous cycle’ of economic growth that lasts beyond next year.” Expect the Biden team and Treasury Secretary Janet Yellen to press that case at the G20 finance ministers’ meetings in April. (The United States is way ahead of other G20 countries in providing fiscal relief during the COVID-19 crisis, according to new analysis from the GeoEconomics Center.)
  • Here’s Josh‘s bottom line: “If the American Rescue Plan isn’t replicated in some form overseas, the US will snap back into a low-growth pace in 2022 and beyond.But if Biden can rally other countries to deploy fiscal firepower in a coordinated way, the 2020s could deliver a sustained global economic recovery.”

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