The $1.9 trillion COVID-19 stimulus plan won’t ‘overheat’ economy: Biden economic advisor


Don’t count White House Council of Economic Advisers member Jared Bernstein as in the same camp of those super worried investors concerned that the $1.9 trillion COVID-19 relief bill will spur a strong stretch of inflation this year (and perhaps hit the equities markets).

“It’s important to distinguish between heat and overheat. Nobody in the White House is arguing that there are zero risks of price pressures, that would be irresponsible. It would be something we of course would not do because any economic policy involves risk. So what you have to do is risk management. You have to examine the risks of doing too little against the risks of doing too much. Now the risks of doing too little are extremely limited,” Bernstein explained on Yahoo Finance Live.

Bernstein said it’s more important to get economic stimulus in the system to help improve the Black unemployment rate, those that are long-term unemployed and others collecting unemployment insurance. He argued the economy’s capacity is “much larger” than many of the people, currently fretting about overheated inflation, realize.

Said Bernstein, “So if you put all of that together, we think we are looking at heat [regarding inflation/economy], not overheat.”

Suffice it to say, the inflationary worrywarts continue to have control of the equities markets right now.

The yield on the 10-year Treasury has gone from about 1.07% on Feb. 1 to 1.56% presently. Investors have reasoned that with a strong economic recovery later this year as more people get the COVID-19 vaccine, inflation will return. In turn, that will spur the Fed to raise interest rates faster than expected and then depress stock prices.

To that end, the 10-year yield eclipsed 1.6% in the immediate aftermath of the better than expected February employment report on Friday. Non-farm payrolls rose by 379,000 in February, above the 200,000 expected. The unemployment rate fell to 6.2%, unexpectedly improving compared to January’s 6.3%. Private payrolls improved 456,000.

Stocks initially fell on the news amid those aforementioned inflationary concerns, adding further pressure to once red-hot tech stocks such as Tesla. While stocks has since recovered, the markets have been ugly the past month as yields have climbed: the Nasdaq Composite and S&P 500 are down 7.5% and 2%, respectively.

Most economists Yahoo Finance have talked with lately are in Bernstein’s camp on inflation, and believe the rise in 10-year yields is overdone. If that proves correct this spring, equities could regain their upward bias.

“When we look at the slack in the labor market, there is a fair amount of slack in the labor market,” reminded KPMG chief economist Constance Hunter on Yahoo Finance Live.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

What’s hot from Sozzi:

Watch Yahoo Finance’s live programming on Verizon FIOS channel 604, Apple TV, Amazon Fire TV, Roku, Samsung TV, Pluto TV, and YouTube. Online catch Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, and LinkedIn.





Source link

it’s your Friday good news — Ask a Manager
Mental health concerns at SMEs have surged during the pandemic
Best Shampoo for Straight Hair
lunch meetings when I can’t eat, I’ve fired my new employee before, and more — Ask a Manager
Cubicle Cowboy – Rawhide and Uncut.
💖6 DIY DOLLAR TREE FRENCH CHIC DECOR CRAFTS /GLAM/ BRIDAL 💖 Olivia's Romantic Home DIYS
#223 – Architect John Lum on His Design Process and Work
How to box in pipes Pipe box in with MDF PLYWOOD PLASTERBOARD drywall
Covid-19 pandemic highlights need for collaboration: HUL CMD Sanjiv Mehta
Chamath-Backed Clover Health in Apparent Squeeze with Massive Short Interest Reminiscent of GameStop
Childcare providers get a much-needed bailout
Hong Kong’s Jimmy Lai faces 12 months in prison for unlawful assembly
Compelling Concepts Balancing Business and the Environment
5 Questions for Katherine Lin: Data Scientist in Training
Future of the Business World: Two Innovators Take Us Inside the Entrepreneurship Journey
Fintech Megatrends Transform Our Relationship with Money
BATANG KUMAKAIN NG BUHAY NA UOD NAG VIRAL ANG VIDEO
Quiet Office Space Design Solutions | Emagispace
Best of the Running Jokes from The Office, Parks & Recreation and Brooklyn Nine-Nine | Comedy Bites
La karibeña – dilbert aguilar – agonia de amor – hd