Economic Relief Isn’t Enough. Do Stimulus, Too

The U.S. government’s multi-trillion-dollar coronavirus package can’t really be called a stimulus: Its main goal is merely to provide relief while the economy is in “lockdown” mode. That’s unfortunate, because it is possible for traditional stimulus to create much needed jobs in some areas of the economy.

All over the country, states have imposed restrictions on economic activity designed to slow the deadly spread of Covid-19. But it would be misleading to say these measures have shut down the economy. The country’s output won’t fall to (anything close to) zero. It’s still possible to produce goods and services (like takeout food) that are deemed essential, or that (like online education) can be consumed without personal contact.1 Traditional stimulus could, in the usual way, boost employment in these sectors of the economy. Suppose, for example, that Congress gave $10,000 to every household. People could use that money to spend more on essential or safe goods and services. The added demand, in turn, would create more jobs in the relevant areas.