S&P US CHIEF ECONOMIST SAYS $5.7-T CAN BE ADDED TO ECONOMY
Beth Ann Bovino, chief US economist for S&P Global Ratings, says the US can make a big economic rebound and eventually add $5.7-trillion if it proceeds with an enormous boost. Writing for CNN Business, Bovino said “we expect the economic damage will be three times greater than the Great Recession, and in one-third the time.
The government's economic relief package, as well as the Fed's stimulus measures, will likely help the economy — but it is not nearly enough. Without an additional boost, I expect US economic activity will shrink peak-to-trough by 11.8% ($566 billion) in real terms and will remain down by 5.2% in 2020. In the worst-case scenario, we may see a peak-to-trough drop of 13.7% in GDP, and remain down by 8.2% in 2020.”
However, Bovino is about ready to abandon the economy, saying it's not too late to change our trajectory, though. An investment in infrastructure would help get the US back on track, with GDP likely recovering in four quarters instead of seven. “In fact, I've found that a $2.1 trillion boost in public infrastructure spending over a 10-year period would have a return of 2.7, meaning that for each dollar spent, the US economy would get $2.70 back. This investment would be around the levels (relative to GDP) seen in the mid-20th century — the last time the US heavily invested in infrastructure,” she added.
Bovino concluded: “Over 10 years, the economic activity generated from this investment would be 10 times bigger than what was lost in the Covid-19 recession. It could add as much as $5.7 trillion to the US economy over the next decade, creating 2.3 million jobs by 2024 as the work is being completed. The additional 0.3% boost to productivity per year that it generates would lead to 713,000 more jobs by 2029. The estimated potential real GDP growth over the next 10 years would rise to 2.2% from 1.7%.”