S&P: Biden coronavirus relief proposal would restore economy by summer

President Biden’s $1.9 trillion coronavirus relief proposal would restore the economy to pre-pandemic levels by this summer, according to an analysis published Monday by S&P Global.

“We find that if the $1.9 trillion package were put into law, the U.S. economy would reach pre-crisis levels in the second quarter of 2021, with a stronger demand-driven path of growth through 2023,” the report said.

Biden’s proposal would also set the economy on course to exceed its pre-pandemic growth path until the end of 2022, when it would start to slow, S&P said.

On the jobs front, S&P said the injection of government funds would likely push unemployment down below 4 percent by mid-2023, a year earlier than its current forecast. The nationwide unemployment rate stood at 6.7 percent in December, the most recent figures available from the Labor Department.

S&P also analyzed the $618 billion counter-proposal for COVID-19 relief offered by a group of 10 Republican senators.

That measure would also boost growth, but maintain a lower growth path over time, according to S&P’s projections.

“While the policies accelerate ‘filling in the demand hole’ this year, they are temporary, and GDP will drift back to a lower pace of growth,” the report said.

The report comes the same day a Congressional Budget Office report forecast that the economic output gap would be $808 billion over the coming four years, meaning a smaller stimulus package than the one proposed by Biden could be enough to restore economic growth to potential.

The S&P analysis, however, found that Biden’s proposal would maintain a higher growth trajectory.