Even With $900 Billion Stimulus, Biden Faces Fragile Economy

on Jan5
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With his presidential inauguration just weeks away, Joseph R. Biden Jr. is confronting an economic crisis that is utterly unparalleled and yet eerily familiar.

Millions of Americans are out of work, small businesses are struggling to survive, hunger is rampant, and people across the country fear getting kicked out of their homes. The moment was similarly perilous exactly 12 years ago, when Mr. Biden was the vice president-elect and preparing to take office.

“I remember the utter terror,” said Cecilia Rouse, who was an economic adviser in the Obama White House and has been chosen to lead Mr. Biden’s Council of Economic Advisers.

The $900 billion pandemic relief plan that moderate lawmakers powered through Congress last month provides the incoming administration with some breathing room. This second tier of aid will deliver $600 stimulus checks, assist small businesses and extend federal unemployment benefits through mid-March.

Instead of hurtling down a hole with no clear view of the bottom, Mr. Biden is taking office when the economy is on an upward trajectory. However anemic the growth, most analysts predict that 2021 will end better than it began even if there are stumbles along the way.

While this pandemic-related recession was larger in terms of initial job losses and closings, it is what Ms. Rouse labeled “collateral damage” from a health emergency and not a crack in the underlying global financial system.

“Now we know what to do: Provide the kind of social safety net for households, businesses and communities so they can get to the other side of the pandemic intact,” Ms. Rouse said.

The Biden administration will also focus on attacking the deep-rooted inequalities that this crisis aggravated, she added.

Even though economic activity will most likely be on an upswing, the economy will remain weakened, Mr. Stiglitz said. Eviction moratoriums and mortgage forbearance have prevented families from losing their homes, but their housing debt has been accumulating even if it has not yet shown up on household balance sheets.

“We’re in a moment where the risk of doing too little outweighs the risk of doing too much,” he said.

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