During the pandemic, the federal government and Federal Reserve combined to create multiple programs to mitigate some of the costs associated with the closure of businesses and a significant increase in unemployment. We favored these programs when they were announced, and the evidence supports their primary objectives and goals being achieved. The U.S. economy, despite having severe negative shocks to major sectors of employment and business, avoided a prolonged and deep recession. The cost of all these programs was not — and, we concur, should not have been — a factor, given the time-sensitive aspects of supporting the economy, businesses and households.
Fiscal Policy Stimulus + Monetary Policy Stimulus = Multiyear Expansion
April 30, 2021