I’m USA TODAY editor-in-chief Nicole Carroll, and this is The Backstory, insights into our biggest stories of the week. If you’d like to get The Backstory in your inbox every week, sign up here.
Economists this week shared some remarkably optimistic news: Even with the damage of the pandemic, the economy is expected to boom this year as coronavirus cases drop, business restrictions loosen and COVID-19 relief money juices growth.
“The thing is, this was supposed to be a dark winter,” said economy reporter Paul Davidson, who reported the rosier outlook in a story published Tuesday. “We had obviously a really strong recovery in the third quarter. But then things really slowed down and this was expected to be a very rough period, largely because of the COVID surges.
“So it almost seemed like magically things have turned around.”
However, he cautioned in his story, “That doesn’t mean the crisis will avoid the long-lasting scars experts have feared: shuttered businesses, millions of long-term unemployed Americans and millions of others who have dropped out of the labor force.”
That’s the rub of the economic recovery. While some Americans have built up savings and are ready to spend, others are in food lines or relying on rent assistance. And this all comes as Congress is debating President Joe Biden’s $1.9 trillion coronavirus relief plan. The House is expected to vote on it today.
To help make sense of the news, I pulled together USA TODAY’s economic experts: financial reporters Davidson, Charisse Jones and Jessica Menton; White House reporter Michael Collins; and economy editor David Brinkerhoff.
Some of their insights:
These bright forecasts are fueled by previous coronavirus relief efforts.
Davidson said due in part to the relief money, including stimulus checks and enhanced unemployment benefits, Americans have saved $1.6 trillion more than what they had before the pandemic.
“January was not supposed to be a good month for retail sales, but it turned out to be a great month, a 5.3% rise in retail sales. So that really woke everybody up that these effects are actually happening maybe sooner than people thought, that people are spending this money they’ve saved up.”
And since consumer spending is 70% of the economy, “that was the biggest thing.”
The current coronavirus relief package most likely will pass, said Collins, “it’s just a matter of what the final vote is and what’s included in it.”
The legislation includes $1,400 checks for Americans earning $75,000 or less, or $2,800 for couples earning $150,000 or less, plus $1,400 per dependent.
It would renew the Paycheck Protection Program for small-business loans, provide funding to help schools reopen, extend federal unemployment benefits through the end of August and boost the amount to $400 per week. It also would raise the federal minimum wage to $15 an hour from $7.25 by 2025.
Critics say it may go too far, adding money for unrelated social policy…
Go to the news source: Economy booming, people suffering as Congress debates