President-elect Joe Biden on Thursday released a $1.9 trillion "American Rescue Plan" designed to aid consumers and businesses, protect jobs and finally wrest control over the escalating pandemic.
The plan calls for another $1,400 per person, along with housing, nutrition, unemployment and other assistance, and a $15 per hour minimum wage, according to the document released on the president-elect's Build Back Better website. Some $160 billion of it would fund a national vaccination program. In remarks announcing the proposal, Biden pledged "100 million shots" by the end of his first 100 days.
The National Retail Federation hailed the intertwined efforts to stimulate the economy and tackle the virus. "In our discussions with the Biden transition team and congressional leaders, there is unanimity in the recognition that we must all work together to overcome the challenges brought about by COVID-19," the group said in a statement.
Despite two waves of relief last year — one passed just under the wire in the last days of the Congressional term — and the swift development of highly effective vaccines, the economy remains under the thumb of a still escalating pandemic.
There is really no solving one problem without tackling the other.
"Until the COVID-19 pandemic is brought under control, the underlying durability of the recovery will remain in question," Jim Baird, chief investment officer at Plante Moran Financial Advisors, said in emailed comments. "Stimulus can help to alleviate the immediate negative effects, but only temporarily. A durable recovery depends on a successful transition to a post-pandemic environment."
The $3 trillion round of pandemic relief last spring, including the CARES Act, was widely credited with staving off further economic fallout from the pandemic. Federal Reserve Chairman Jerome Powell called the packages from March and April "by far the largest and most innovative fiscal response to an economic crisis since the Great Depression."
Wells Fargo Senior Analyst Ike Boruchow in emailed comments Friday said that the added relief signed in the final days of the year is likewise "fueling consumer spending, but we believe it has the potential to generate an even more powerful top-line benefit" compared to the earlier period when so many stores were closed. The various elements in the Biden plan are likely to be passed by Congress and could further benefit retailers, Boruchow also said.
But so much of that potential rides on reining in the virus, which has continued to rage due to a number of factors including a breakdown in vaccine distribution logistics.
"There's still a bright light at the end of the tunnel; the question is how long will it take to emerge from the other end?" Baird said. "The answer lies in the COVID case and vaccination data. Watch that closely."