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US can orchestrate soft landing through fiscal stimulus - Piper Sandler

Published 02/28/2024, 07:26 AM
Updated 02/28/2024, 07:29 AM
© Reuters.  US can orchestrate soft landing through fiscal stimulus - Piper Sandler

Analysts at Piper Sandler said in a Monday note that the US could orchestrate a soft landing through fiscal stimulus measures such as student loan forgiveness, tax cuts, and more defense spending, among other things.

According to analysts, the absence of conventional growth drivers in the economy means that avoiding a recession could necessitate fiscal generosity.

"In order to have a soft landing in 2024, additional fiscal stimulus would be needed (such stimulus definitely kept the economy stronger, longer in 2023)," analysts said.

Analysts outlined several fiscal measures the government could opt for to accelerate economic growth in 2024.

These include more student loan forgiveness, distributing grants under the CHIPS Act, and the recently proposed Wyden-Smith tax cut deal.

In addition, Piper Sandler also listed Employment Retention Credit (ERC) payouts and the $95 billion defense bill which has recently passed the Senate, and now awaits House action.

If the aforementioned steps come to pass, it could translate to an additional 1.5% boost to GDP from fiscal stimulus this year, analysts said.

“If all the above come to pass, it would take our 2024 real GDP forecast from -1% to +0.5%, and keep worst case unemployment below 4.5%, saving roughly 1.5m jobs,” they wrote.

“A confirmed soft landing would be good for (nominal) earnings, and in turn stocks,” analysts added.

One potential downside of this strategy is that it could hinder the Federal Reserve's ability to lower interest rates given the robust economic environment it would create.

Latest comments

to hell with inflation. let's triple it with more fiscal incontinence..
During covid we spent like a drunk sailor on shore leave. This additional spending will kill that drunk sailor.
I wish there was a way to report articles on this site and app as spam 🤣🤣
What happened. What do you want to report
and in 2025? then what? this is a clear instance of financial firms saying stuff for the sake of saying stuff.
Yes , spend like hell . Like there is no tomorrow. Inflation will tell you are wrong .
This article is absurd on its face. Not unlike quite a few of the braindead partisan hacks that post here.
These *analysts" are a step behind.
You dont stop inflation by printing money and giving unlawful handouts to people. Yoy need econmic expansion. The only thing expanding quicker than your head is US weapon sales. No wonder you rubes have to constantly be goaded into wars.
Just announced: USA GDP growth for Q4 +3.2%. Get your facts straight, horseface.
It took $2.50 in government debt to grow $1.00 in 4Q GDP. Fact, Brad-hominem.
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