According to the US Office of Management and Budget, the budget deficit will remain close to $1 trillion or more for the next ten years.
OMB reported that it expects the fiscal deficit to fall this year, from $3.13 trillion in 2020 to $2.260 trillion in 2021. Besides, it estimates that it will continue to fall until 2024, at which point it will begin to grow again to $2 trillion in 2031.
However, these estimates are likely to be less than optimistic, considering that they do not reflect the plans of the Democrats to approve a package of economic aid against Covid-19 of 1.9 trillion dollars.
Powell affirms that the FED will continue with expansionary policies
In his appearance on Wednesday, Jerome Powell, president of the FED, announced that the Federal Reserve would continue to support the US economy by maintaining low-interest rates and with its aggressive bond purchase policies.
Powell reiterated his opinion. He stated that an expansionary monetary policy would be a fundamental factor for the American economy. It would help recover to a healthy state where workers who have lost their jobs due to COVID-19 can return to the market, especially those with low incomes.
Powell said that currently, the country is a long way from having a healthy job market.
Referring to the January employment report, Powell indicated that the number of unemployed has increased by almost 10 million Americans, compared with February’s data last year.
The Fed chief also repeated the idea that monetary policy, by itself, is not enough. It will also be necessary to carry out fiscal policies to restore its strength to the labor market. It will require a commitment from the whole of society. It will need contributions from both the government and the private sector, Powell said.
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