Since the outbreak of the COVID-19 pandemic, global fiscal relief measures have been unleashed in an effort to support the global economy in the face of an unprecedented collapse in spending. The recently passed American Rescue Package was the fifth round of legislation providing additional cash to individuals, businesses, the healthcare system, and state and local governments.
As illustrated in the chart above, the cumulative targeted spending and transfer payments distributed by the federal government over the past year had as price tag of over $5 trillion, amounting to nearly 25% of 2020 nominal GDP. How does that compare to prior spending packages? Fiscal aid enacted during the Global Financial Crisis (GFC) totaled approximately $831 billion — just over 5% of 2009 nominal GDP, which was a significant outlay at the time. A 2010 report by the Congressional Research Service indicated that the aggregate military cost incurred by the United States in World War II was about $4.1 trillion. By virtually any measure, the fiscal outlay aimed at sustaining the economy through the past year has been immense.
It’s safe to say the COVID-19 crisis is amounting to be one of the costliest relief efforts in U.S. history. The massive infusion of cash contributed significantly to perhaps the fastest economic recovery in U.S. history. Another round of stimulus should fuel further growth in consumer spending, keeping the economic engine on track in the near term.
Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.
Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.
Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.