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Macro Insight - US: Biden's Rebalancing Acts

Our analysis shows that the largely tax-funded American Jobs Plan proposed by President Biden would have a modestly positive impact on the US economy.
19 May 2021
    Download the full reportPDF, 458.74KB

    Key take aways

    • The US government has enacted a series of large fiscal relief packages totalling $5.7tn (27% of 2020 GDP) to help combat the crisis
    • In March, President Biden announced the American Jobs Plan, a strategic proposal to increase infrastructure spending
    • However, as the plan is largely tax-funded, it differs from the previous fiscal relief packages
    • As a result, we find that the package would have a modestly positive impact on GDP and inflation
    • Political wrangling over the details could affect the overall impact of the plan
    • In late April, President Biden announced a second tax-funded reform package focusing on social policy – The American Families Plan (AFP)
    • At this stage, the AFP faces major obstacles to becoming law with resistance expected from conservative Democrats
    • Growth and tax effects from President Biden’s reform packages are consistent with our neutral view on US equities
    • Meanwhile, the risk that the packages become more deficit-financed backs up our underweight stance on US Treasuries