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Despite the stock market recovery, major challenges await the Biden administration

The stock market has rebounded with the new US administration approaching the White House, so will the economic boom continue under the new president’s administration, Joe Biden?

Observers expect that the new US administration will face major challenges on the economic front to achieve the desired recovery in the coming period, despite the positive indicators that the stock market recovery bears.

In a report published by the British newspaper, The Independent, writer Hamish McCray says that the US economy is still in good shape despite the severe political crisis that the country is going through, as the stock market recovered and made more gains despite the events of the congressional storm.

According to the writer, the financial influx that has elevated Elon Musk, founder of Tesla, to the first place in the list of the richest businessmen in the United States, is considered evidence of the strength of the American economy and its ability to overcome the biggest crises, but the question now is, will this continue The boom under the administration of the new president, Joe Biden?

The boom is likely to continue in the short term for several reasons. The first is that fiscal policy will be more flexible. After the Democrats take control of both chambers of Congress, it will be easier for the new administration to obtain the approval of lawmakers for more financial incentives to revive the economy.

In recent days, a new stimulus package worth 935 billion dollars has been passed to help millions of Americans affected by “Covid-19”, and other packages worth 1,400 billion dollars are expected to be approved.

In the short term, too, it is expected that the monetary easing policy adopted by the central bank will continue, as confirmed by the President of the Cleveland Federal Reserve, Loretta Meester, and her counterpart in Chicago, Charles Evans, who emphasized that monetary policy “must be accommodative.” For a long time, “and it is expected that things will continue in this way over the next two years.

There is a third factor that may lead to the continuation of the current boom, and it is not related to the policy of the new White House administration per se, but is mainly related to hopes of recovery from the health crisis, as the United States tops the list of countries whose citizens will receive “Covid-19” vaccines, which means that The way back to normal life will be very clear next April.

The boom is likely to continue in the short term for several reasons, the first of which is that fiscal policy will be more flexible (Reuters)

Obstacles await

In contrast to these factors that indicate an economic recovery in the early days of Biden’s presidency, the writer believes that there are at least 3 obstacles looming on the horizon, the first of which is the dollar.

There was widespread expectation that the value of the dollar would decline in 2021, and a report issued by Citibank in November stated that the price of the dollar might decline by up to 20%. But recently, a number has emerged Of the reports that confirm the exact opposite, including the report of the official forum of monetary and financial institutions.

In light of these conflicting expectations, it is expected that the dollar will decline at a later stage after the recent rise, which may give a boost to the US economy, but at the same time it will lead to higher import prices and an increase in inflation rates.

The second problem facing the Biden administration at the economic level is the expected clash with the technology giants, as the US government is required to define a clear policy in dealing with one of the most pressing issues in the country, in light of the mounting criticism of the major technology companies.

The writer wonders whether the Biden administration will choose to support the tech giants in the face of Chinese ambitions, or will it give priority to domestic considerations, such as protecting the American consumer?

The third factor that may hinder the new administration is the critical situation that small companies are going through in the United States, which do not have many options to benefit from government aid, unlike large companies that are able to attract more employees to obtain government support.

Smaller companies are still largely afraid of the Biden administration’s retreat from the measures to lift the closure that were taken in the last period, concerns that should be dealt with seriously, according to the writer.




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