Expert Pitch
University of Notre Dame

Notre Dame expert says “stimulus” package is economically appropriate, urges caution

25-Mar-2020 2:15 PM EDT, by University of Notre Dame

The White House and Senate March 25 reached a historic $2 trillion legislative package to counteract the negative shock from the coronavirus to the U.S. economy.

Congress should be applauded for putting together such an unprecedentedly massive package so quickly, according to Jeffrey Bergstrand, professor of finance at the University of Notre Dame’s Mendoza College of Business.

Bergstrand, a former Federal Reserve economist, said the size of the package is economically appropriate, however, he urged caution on several fronts.

“First, this program is only insurance against the viable possibility of a depression,” Bergstrand said. “At this time, $500 billion in cash payments to households, $350 billion in loans to small businesses, $100 billion to hospitals, $500 billion in support for large corporations in selected industries and an increase in unemployment benefits provides liquidity to households and businesses just to stay open. This will simply postpone closure of businesses and personal bankruptcies.

“It should not be viewed as a stimulus program, as it is not likely to push the economy back to its fourth quarter 2019 GDP level. The economy is certain to recede in the first, second and third quarters of 2020,” he added.

Economists have suggested this is a temporary negative shock to the economy, implying falling economic activity for the second and perhaps third quarters of 2020, but then economic activity will resume. However, Bergstrand is wary of claims of a temporary recession. At the time, the economic shock suffered globally during the Great Recession of 2008-2009 was also initially viewed as temporary, he said.

“As we know from history, the Federal Reserve and the U.S. Treasury acted in concert to provide liquidity – at that time, also, an unprecedented timely increase – which stabilized both the banking system and the economy,” said Bergstrand. “However, it is important to recall that the economy operated below full employment for eight more years, from 2009 to 2017.”

“U.S. economic activity is not immune to the rest of the world,” he said. “U.S. exports account for approximately 12 percent of demand for U.S. GDP. As during the Great Recession, the eurozone is fiscally constrained without the economic framework for the type of massive fiscal spending and government deficits that the U.S. government can allow. It is unlikely that they will respond as quickly or as magnanimously as the United States’ federal government, hurting the U.S. recovery. Also, we have yet to see with any confidence the economic impact on Southern Hemisphere economies in Latin America and Africa.”

While the $2 trillion legislative package will provide liquidity to maintain solvency of households and businesses over the next two quarters, Bergstrand cautions only proper health guidelines from government will allay a major component of the decline in economic activity before some current state lock-downs.

“Even before present lock-downs,” he explained, “aggregate demand in consumer and investment spending had fallen by households and firms due to uncertainty about individuals’ health. The lack of a majority of U.S. states imposing shelter-in-place and the recent prospect of less federal government support for shelter-in-place will cause uncertainty to rise again, stifling a possible recovery and potentially prolonging the recession – and deepening it.”

Filters close

Showing results

110 of 5575
Released: 6-May-2021 4:20 PM EDT
How to Win Over Vaccine Skeptics: Live Expert Panel for May 20, 3pm ET

How to Win Over Vaccine Skeptics: Live Expert Panel for May 20, 3pm ET

Released: 6-May-2021 2:15 PM EDT
Review of the Emerging Evidence Demonstrating the Efficacy of Ivermectin in the Prophylaxis and Treatment of COVID-19
Front Line COVID-19 Critical Care Alliance (FLCCC Alliance)

After the Most Comprehensive Review to Date, a Panel of Leading Medical Experts Conclude that Ivermectin Should be Systematically and Globally Adopted for the Prevention and Treatment of COVID-19

Released: 6-May-2021 2:10 PM EDT
Mayo Clinic


Newswise: CSUCIVaxClinic4-29-21.JPG
Released: 6-May-2021 2:05 PM EDT
CSU Expands Vaccine Availability with New Partnerships
California State University (CSU) Chancellor's Office

Many CSU campuses now offer even more options for students and employees to get their COVID-19 shots, thanks to unique partnerships with national pharmacies and local hospitals.

Released: 6-May-2021 1:50 PM EDT
الأطفال أيضًا يواجهون آثارًا طويلة المدى لفيروس كورونا المستجد (كوفيد-19)
Mayo Clinic

مدينة روتشستر، ولاية مينيسوتا ― تؤثر الآثار طويلة المدى لعدوى فيروس كورونا المستجد (كوفيد-19) على صحة بعض الأطفال والمراهقين، وكذا البالغين. في حين أن معظم الأطفال المصابين بعدوى فيروس كورونا المستجد (كوفيد-19) يعانون من أعراض خفيفة أو لا تظهر عليهم أي أعراض على الإطلاق، فإن أي شخص أصيب بفيروس كورونا المستجد (كوفيد-19) - حتى لو كان المرض خفيفًا أو لم تظهر عليه أعراض - قد يُصاب بآثار طويلة المدى.

Released: 6-May-2021 1:35 PM EDT
As crianças também enfrentam efeitos de longo prazo da COVID-19
Mayo Clinic

Os efeitos de longo prazo da infecção por COVID-19 estão afetando a saúde de algumas crianças e adolescentes, bem como de adultos. Embora a maioria das crianças com infecção por COVID-19 tenha sintomas leves ou nenhum sintoma, qualquer pessoa que teve COVID-19, mesmo se leve ou sem sintomas, pode ter efeitos de longo prazo.

Newswise: Retired Nurse Returns to the Front Lines
Released: 6-May-2021 1:25 PM EDT
Retired Nurse Returns to the Front Lines
Rush University Medical Center

During the COVID-19 pandemic, Martha Kuhr, RN, came out of retirement to care for some of Rush University Medical Center's most severe COVID-19 patients in the CVICU.

Released: 6-May-2021 12:40 PM EDT
Achieving high COVID-19 vaccine coverage levels by summer can prevent millions of cases
CUNY Graduate School of Public Health and Health Policy

With around 30 percent of the U.S. population now fully vaccinated, the rate of daily vaccinations has started to slow, raising concerns that greater efforts and investments may be needed to reach higher coverage levels.

Released: 6-May-2021 12:30 PM EDT
Los niños también enfrentan los efectos a largo plazo de la COVID-19
Mayo Clinic

Los efectos a largo plazo de la infección por COVID-19 están repercutiendo en la salud de algunos niños y adolescentes, además de los adultos. Si bien la mayoría de los niños con infección por COVID-19 tienen síntomas leves o no tienen síntomas en absoluto, cualquier persona que haya tenido COVID-19 (incluso si la enfermedad fue leve o no tuvieron síntomas) puede tener efectos a largo plazo.

Showing results

110 of 5575