MACRO NOTES Last fortnight was interesting and all eyes are now on US for various reasons. Quoting The Economists “US is undergoing three economic experiments at the same time: Huge fiscal stimulus (at around 14% of pre-Covid GDP) Monetary policy which is far more tolerant to inflation [In new framework FED is targeting average inflation of 2%] Households holding huge savings level and question is whether they will spend? In the light of above facts, it pays to be attentive to what is happening in US on both Monetary and Fiscal front: Fiscal President Joe Biden has taken huge gamble by going in for big fiscal stimulus of $ 1.9 Trn upfront. Alternate approach suggested was nibble with small stimulus and wait for impact of Vaccine + recovery. Post that go for a larger stimulus, if required. Composition of stimulus is as below: Covid Containment and Aid to States and increased federal spending: $ 750 Bn= Unemployment Benefits: Cont...
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