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the piano expected by Joe biden For him United States economic recovery after the Covid-19 pandemic crisis you will have to deal with different risks.
Despite the expected stimulus program of more than $ 900 billion discussed these days in Congress Washington, the problem of private debt of US companies it could jeopardize growth for years to come.
At the moment there are some negative forecasts and others, however, quite optimistic about the future of the US economic system. Both are based on fairly true starting points, but which will have to face the test of facts in the coming months.
United States: the risks for Biden and his economic recovery plan
The most pessimistic assumptions refer to billions of dollars loaned in recent months to companies to avoid bankruptcy, but they are a risk of insolvency due to the uncertainty affecting your business.
The Fed, acting as guarantor for the investors who made these loans available lender of last resort.
A strategy that, as is also happening in Europe, on the one hand protects against short-term closures, on the other, runs the risk of private sector more vulnerable in the future.
Record debt of private companies
me debts of companies have achieved a record $ 850 billion from the end of 2019 to September 2020 and the forecasts for 2021 are not promising at the moment.
By S&P Global Ratings, the default rate for speculative debt stands at range between 9 and 12% in the third quarter of next year, that is, it would return to the levels recorded during 2008 recessions and, going back in time, from 1990.
A situation that could cause, as on the other occasions mentioned, the implosion of the economic-financial system American from which it would be very difficult to recover.
In fact, this time the operators of the real economy would be affected, who could not even guarantee reforms promised by Biden himself in the electoral campaign, such as the ecological transition, the reduction of unemployment and the increase of guarantees for workers, including the guaranteed minimum wage.
The most optimistic forecasts
In better perspective, where S&P expects a default rate for the same period of time considered as only the 3.5%, the scenario could change and assume less worrying contours.
As Ben Harris, Biden’s advisor during his time as vice president from 2014 to 2017, explained, we could expect the first half of 2021 to still be characterized by economic difficulties, and then observe a rebound in the last 6 months and a definitive exit from the crisis in 2022.
According to Harris, the distribution of Vaccine for COVID-19 will play a decisive role in the recovery, also helped by increased consumer spending after savings reserved during the lockdown period.
In this point of view, if a Joe biden allowed all proposed stimulus policies to be implemented, and with the Senate on his side, a new growing season for America could soon become a reality.
