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The economic recovery package passed by Congress last month was large, quick, inefficient, but ultimately effective.
1. The stimulus was large. In the first round, $2 trillion in aid was approved; more funds were approved earlier this week. For context, the Recovery Act and TARP in 2009 was about $1.8 trillion in inflation-adjusted dollars and the New Deal during the Great Depression was about $826 billion after adjusting for inflation. So even after adjusting for inflation, this legislation was larger than its predecessors.
2. The stimulus was fast. Legislation was passed within days after we realized we would need to enforce a quarantine which would result in an economic shutdown.
3. Any time you have something this large and fast, it’s going to be inefficient. I’m not blaming any particular politician or political party — they were dealt an incredibly difficult hand — but a lot of small businesses that this money was meant for did not get the assistance they needed, while larger corporations with access to debt markets and universities with multibillion-dollar endowment funds did receive money.
4. But, yet, it was effective. The quick action contributed greatly to the market’s rally these past few weeks. When news came out that the legislation was virtually guaranteed that was the exact moment the market started to recover from its steep losses in early March. Earlier this week, Congress passed more funding, which will hopefully further alleviate the economic pain being felt by millions of Americans.
