The US Economy after 2020 crisis: prospects of recovery
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The US Economy after 2020 crisis: prospects of recovery
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The article aims to show the prospects of economic recovery in the USA after economic crisis of 2020. The author reviews in detail the reasons for and scale of the crisis. It is shown that despite the cyclical origin, the crisis was reinforced by the pandemic of coronavirus. The downfall of GDP during 1st quarter of 2020 accounted for 5%, and during 2nd quarter – for 31.4%. The author demonstrates the scale of the crisis in different industries and spheres of activities, shows the negative dynamics of macroeconomic indicators in industry, in service sector, on financial markets and in foreign trade.

The author also observes the government role in confronting the economic crisis. It is discovered that the main measure of government policy became the fiscal policy. In response to the pandemic the United States Congress passed three laws in the March alone. The legislation included more than US$ 2 trillion (around 11% of GDP) in new spending and tax relief, making it the largest rescue package in United States history. As a result the federal budget deficit accounted in 2020 for US$ 3.7 trillion or 18% of GDP. New rescue economic package of President D. Biden accounted for U$ 1.9 trillion. It supposed one-time checks to individuals, increasing and extending unemployment benefits, raising the federal minimum wage to US$ 15 an hour, massive investment for healthcare, for public communities. 

In general Joe Biden’s economic policy is substantially different from D. Trump’s policy. It proposes to increase top tax rate to 39.6%, to raise the corporate tax rate to 28%, to expand “Buy American” policies through government purchasing, to invest US$ 2 trillion on clean energy during Biden’s first term as president.

The author emphasizes that the prospects of economic recovery are still uncertain, because the perspectives for the end of the pandemic are still unclear. Nevertheless there are several scenarios of ending the crisis and subsequent economic recovery. The most realistic one assumes that the real GDP will increase in 2021 by 4.1%, and unemployment will decline to the level of 5%. The conclusion is made that basic macroeconomic indicators will gradually improve in middle-range perspective.

About authors
Victor Supyan
Institute for the U.S. and Canadian Studies of the Russian Academy of Sciences

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