David Kelly, chief global strategist at JPMorgan Funds, wrote that President-elect Biden's new stimulus could curb unemployment.
A simulation of the plan found that unemployment could dip below 5% by the end of the year, Kelly wrote in a research note. Down from a pandemic peak of 14.7%, December's unemployment rate was 6.7%, with 10 million Americans out of work.President-elect Joe Biden's ambitious $1.9 trillion stimulus bill could help cut unemployment to nearly a third of its pandemic peak.
In his note on the week ahead, David Kelly, chief global strategist at JPMorgan Funds, wrote about how "conservative simulation of the impact of the plan" played out. That simulation assumes that the plan's final cost is $1.5 trillion, and that $1.2 trillion of it will be dispensed between now and the end of September.
"In this simulation, the Biden rescue plan could boost nominal GDP growth to 11.4% year-over-year by the end of this year — most of which would come in the form of stronger real GDP growth, although it would likely also result in higher prices, as hyped-up demand confronted a limited supply of services," Kelly wrote. "This could push consumption deflator inflation above the Fed's 2% target and cut the unemployment rate to below 5% by the end of the year.".
Good or bad ?