“They’ve put in a lot of stimulus,” Hassett told CNN Business Thursday, “but I think we have to be careful.”
“There are so many companies standing still, barely hanging on. Now they are hit by another shock,” said Hassett, who was Trump’s chief economic adviser from 2017 to 2019 before returning. in a volunteer role in March of last year. “You could find yourself on a downward spiral for the economy.”
“The disease is spreading at a remarkable and frightening rate,” said Hassett, now a Distinguished Visiting Fellow at the Hoover Institution at Stanford University.
Biden’s $ 1.9 trillion plan
Lindsey Piegza, chief economist at Stifel, fears the federal government is rushing too quickly to spend more money on the problem.
“I would like to see a smaller, more focused approach as we see the economy evolve and adapt, rather than layering extra money on helicopters,” Piezga said.
For his part, Hassett said that there may be elements of the Biden package that he likes more than others, but basically he is “absolutely” in favor of the plan.
How vaccines and the pandemic are impacting the economy
The pandemic is clearly causing real damage to the economy, especially in virus-prone industries such as restaurants, cinemas, hotels and cruise lines.
The slow deployment of the vaccine risks prolonging not only the health crisis, but also the economic crisis.
The acceleration of vaccine distribution is complicated by logistical challenges and the disastrous transition between the Biden and Trump administrations.
Somewhat counterintuitively, Hassett fears that the US economy will take another blow when vaccine distribution accelerates. He explained that people who are next to receive a vaccine, or who have already received a single dose, will be extremely careful to avoid getting infected.
“If you hide in your basement for three weeks then you know you’ll be fine,” Hassett said. “There will be a massive increase in risk aversion. We should expect the economy to really, really slow down, even if the government doesn’t call for more closures.”
Hassett predicted that after some haggling, Congress will pass another major stimulus package next month. He noted that Congress and the Trump administration were close to a nearly $ 2 trillion stimulus deal last fall.
“Now that the elections are behind us,” he said, “people can only focus on what is good for the country”.