A broad pattern of improved business activity and employment growth
Economic Recovery: Where We Are and the Road Ahead
The United States economy has recovered exceptionally well after the COVID19 trauma. This positive outcome is greatly due to the US government’s implementation of various policies. US policymakers enacted economic relief and recovery policies to strengthen and transform the US economy, which led to a variety of monetary boosts in specific sectors of the US economy.
Policies implemented in 2021 like the Raise the Wage Act and the American Jobs Act showed considerable positive results. The goal of the Raise the Wage Act is to gradually raise the minimum wage for low-income jobs to $15 per hour by 2025.
The American Jobs Plan is the most unprecedented. It’s part of the President’s $2.3 trillion infrastructure plan, which includes upgrading and rebuilding roads, highways, railways, home infrastructures, training more caregivers, improving the electrical grid, improving the environment, and more.
After the start of 2021, over 8.5 million new jobs were created, and the national GDP output returned to the end of 2019 levels. A recent study showed significant wage increases for low-income families and considerable reductions in poverty for certain demographic groups and female-headed families.
However, despite all these efforts, many Americans are still struggling daily to make ends meet. Around the world (not in the US alone), inflation remains an ongoing challenge as the prices of services and goods continue to rise due to supply chain bottlenecks.
In addition, the world finds itself in an economic crisis with rising inflation, lockdowns in China, and Russia’s war on Ukraine. The US also faces climate change issues with more foreseeable droughts in the West. All these factors will ultimately create great economic uncertainty and will, without a doubt, lead to more price hikes. However, the US economy is significantly strong compared to other first-world countries.
This is the direct result of the passing of the American Rescue Plan Act, signed into law on 13 March 2021 by President Joe Biden. Thankfully, the US labor market and economy were supported due to the extraordinary investments made by the government. Without this initiative, the US would’ve had a significantly larger unemployment rate, resulting in a devastating recession.
With this said, the Federal Reserve has the prerogative to take independent action and increase its short-term interest rates to combat inflation. This will lower the demand and slow down the economy. However, if imposed too drastically, it will increase the risk of a recession.
Moreover, the detrimental effects of a slower economy will hit low-income households the hardest. It’s unfortunate, but there are still some demographic groups that are still struggling daily with the pressures related to the cost of living. Hard working Americans who’ve just recently started making positive financial changes in their lives will be forced back to square one.
To reduce inflation and place less pressure on the Federal Reserve to increase interest rates, the Biden administration introduced the Inflation Reduction Act, signed into law on 16 August 2022. The Act addresses inflation hikes and combats the most considerable expenses that are crippling US families today.
As Americans, we can look forward to the closure of tax deduction loopholes that the wealthy and corporations have extorted to collect on tax cheats. This tax reform will lead to a reduction in surplus demand, thereby reducing inflation in a more positive manner. The Act also ensures that smart investments will be made in the manufacturing of domestic products and creating clean energy.
Most of all, the average American will pay less for necessities like gas, prescription medication, healthcare, groceries, and more. Thereby creating a more stable, solid, and sustainable US economy for all.
Sources:
https://www.weforum.org/agenda/2021/04/joe-biden-s-2-3-billion-investment-plan-explained/
https://www.cantwell.senate.gov/imo/media/doc/Raise-the-Wage-Act-of-2021-Fact-Sheet-FINAL.pdf
