Job Shifts Ahead Argue for Large Stimulus

The debate in Congress over pandemic relief is overlooking something crucial: the shifting of jobs from one sector to another that is to be expected after the health crisis ends. This coming reallocation in the economy adds to the arguments in favor of spending $1.9 trillion on pandemic relief.

So far, traditional views of aggregate supply and demand have dominated the fiscal policy discussion. Some people argue, for example, that $1.9 trillion could boost demand too much — risking “inflationary pressures of a kind we have not seen in a generation.” This conclusion is drawn primarily from calculations about aggregate trends in potential economic output or income. Even on these terms, the skeptics are not particularly convincing, especially since we still don’t know how persistent the pandemic will be in 2021.