The US dollar is known worldwide as the most valuable currency for carrying out business transactions. Despite ups and downs, a stable currency can, over time, retain its purchasing power, and the US Dollar is no different. Certainly, the dollar is one of the most frequently used currencies globally; it accounts for over 85% of the world's business transactions. Further, the dollar has been able to stand the test of time regarding other leading currencies such as the Euro, the Sterling Pound, and the Yen.

Statistics show the US Dollar made a significant jump on the stability index in the past year alone, and this is because of how stable the dollar has continued to be. Further, many countries use the dollar as their official currency. These include countries like Panama. In addition to the US economy's strength, "size" is a primary factor contributing to this stability. The US economy is the biggest globally, with a Gross domestic product of over $20 trillion. The dollar's strength continues to rise since it funds the vast US economy.

Think of it: The International Monetary Bank (IMF) is a financial institution that improves its member countries' economies. According to the organization, over 60% of foreign banks' reserve cash is in Dollars. Further, many loans which are provided to countries all over the world exist in dollars. This preference of transacting using the dollar makes the currency quite stable; its value is always increasing from a financial perspective.

Generally, banking institutions significantly contribute to the dollar's stability. Further, banks' interest rates (Federal funds rate) have a ripple effect on the economy's interest rates. These high rates make the dollar stable as the value of the dollar rises progressively. Also, foreign investors usually seek to put their capital into the economy; they want higher returns on bonds and investments.

The sale of these investments will always make the dollar's exchange rate soar hence boosting its stability. Because of the financial crisis of 2008, the Federal Reserve raised the federal funds rate. This rate rise resulted in a shortage of money supply in the larger economy. Ultimately, the dollar became more stable. Borrowing the dollar became more expensive as its value had significantly risen.

Certainly, inflation levels in the US also contribute to the dollar's stability. If there are high inflation levels in the country, people spend more, resulting in higher prices for goods and services. Notably, investors with bonds will get higher fixed returns during high inflation levels, hence the dollar's stability. Inversely, low inflation levels indicate a weak economy and a weak Dollar, as people's purchasing power falls dramatically.

The US Department of Treasury manages treasury notes sold to investors at fixed interest rates from time to time. These notes affect the dollar's strength and its overall stability. High demand for these notes prompts investors to pay more for the notes than their original face value, resulting in a lower yield for the investors and vice versa. A high yield indicates the dollar is in low demand and hence its diminished strength. For instance, in 2016, the dollar strengthened as treasury notes yield fell to 2.4%. This indicated that the dollar was relatively stable at the time.

Many countries worldwide have foreign cash reserves in Dollars. These countries' exports enable them to hoard more dollars when they get paid in dollars for exports. Countries like Japan and China are fond of this hoarding, enabling their currencies' value to remain lower. However, the rise of the dollar makes these reserves' value rise, prompting these countries to acquire more dollar currencies in the form of imports. This makes the dollar's value rise and hence its overall stability.

Finally, the financial markets are another reason why the dollar continues to be stable. In many foreign exchange markets, over 80% of the trade involves using the dollar. Further, being the most significant financial market globally, the dollar’s preference has made its value rise consistently. In turn, this has made the currency more stable. Ultimately, the dollar is the most traded currency pair in the market; many traders pair the dollar with other currencies when carrying out their trade. This preference certainly contributes to the dollar's admirable stability and fortitude.

Cryptocurrencies have emerged as a new way of carrying out financial transactions, especially in the US. The banking sector in the US has decided to embrace this unique piece of technology. Recently, the Currency (OCC) office Controller provided a way forward for this to be possible. Banks now have a bigger incentive to offer custodial services to cryptocurrency businesses.

Banks can now provide their services to businesses that receive payment in cryptocurrencies- in a better way. Note that in the recent past, the banking sector has been hesitant when dealing with cryptocurrencies. Of course, the latest technology has an element of high risk embedded. Regardless, banks such as JP Morgan Stanley have gone ahead of the curve and created their digital currency (the JPM coin). Also, the bank has made Onyx an entity designed to compartmentalize its digital currency. Cryptocurrency acceptance in the banking sector is multiplying, and this presents abundant opportunities for the future.

Cryptocurrencies will undoubtedly add to today's banking trend of paperless cash, which couldn't have come at a better time. Many businesses are now accepting bitcoin as a payment method. It only makes sense that banks should put in place measures to make this possible. However, banks will have to come up with stable coins to capitalize on this new technology.

Stablecoins will be better in terms of volatility, which has been a risk factor for Bitcoin. The creation of these stable coins will have massive implications for the financial sector. Insurance protection by businesses will skyrocket since many companies want to protect themselves from risks. As initial coin offerings(ICO) become a part of today's businesses, banks should ensure they have the necessary infrastructure to receive cryptocurrency capital for companies.

Many banking institutions still fear government-backed currency might become devalued because of cryptocurrencies. This fear does not hold any truth, as many people still prefer the US dollar. Notably, cryptocurrency infrastructure processes fewer transactions than the regular dollar. These transactions present a challenge for digital currencies. As banks integrate digital currency into their services, transaction speeds will surely increase.

But-ironically- cryptocurrency transactions have an element of transparency. Customers can have a peek into how the digital currencies move, which could be significant for banks. Most banking transactions involve secrecy. Also, the banking sector will gain customers' trust more, as they will see how their money moves. Digital currency has also provided credit to people with no bank accounts. Internet access is certainly more prevalent in the US. The credit provision has enabled more people to be able to purchase and trade in cryptocurrencies. More people will be able to access credit and loans based on their E-wallets balances.

Wha else? Transaction fees for banks will become a subject of contention, as cryptocurrency transactions do not have transaction fees. Banks will have to develop a mechanism enabling them to make a profit. As more businesses integrate digital currencies into their operations, banks will have to develop ways to profit without losing their customers' trust.

International trade has the convenience of cryptocurrencies, and the banking sector has seen a considerable rise in profits due to this development. Banking institutions that offer stable coins will significantly benefit. Moreover, eCommerce in the US has risen massively to 44%, especially with the Covid 19 lockdowns. Digital currencies have enabled most people to make purchases faster using bitcoin. It has, therefore, become imperative for the banking sector to facilitate this trade.

We must note that even as the banking sector embraces digital currencies, there is a need for special regulatory measures to be put in place. The proposed digital currency regulatory bill (STABLE Act) contains measures to ensure that banks' digital currency is consumer-protective. In the new proposal, banks with stable coins will have to possess a bank charter to give the stable coin. Further, banks that offer a stable coin are required to inform the Federal Reserve and other relevant banking agencies six months before unrolling the stable coins. They must also obtain insurance from the Federal Deposit Insurance Corporation (FDIC). This insurance is to facilitate liquidity on demand of the stable coins.

Ultimately, electronic savings will increase as more digital currencies get integrated by banks. Banks will be able to access more cash for lending. The overall US economy will improve as more investments by these banks become a reality. Also, interest accrued by such savings will give customers increased income on their electronic savings. Immediate liquidity will become easier for these banks in case of massive withdrawals by customers. Eventually, the banking sector in the US will become significantly more efficient; that's most encouraging.

Like elsewhere globally, the US manufacturing sector felt the adverse effects of Covid 19, with many operations getting halted. This resulted in the loss of jobs since the industry is usually labor-intensive. Moreover, it presented a new outlook on how the manufacturing sector needs approaching.

Regardless, adopting technological solutions, such as mobile robotics and artificial intelligence in the manufacturing sector has proved crucial. This is especially true in a pandemic period when the availability of labor was scarce. Interestingly, certain manufacturing firms ( like Tesla), who have integrated technology into their manufacturing processes, continued to thrive even with the labor scarcity.

Moreover, employee-training is crucial, even as more manufacturing firms shift towards smart technologies for their business processes. Certainly, employees' training will enable such businesses to work more efficiently with technology such as robotic machines and artificial intelligence programs. Further, hiring the best and top talent in a company's respective manufacturing sector is essential. The provision of incentives is equally significant for companies to attract talented employees.

Without a doubt, the manufacturing of products in the US has become crucial, as the country experienced shortages of various products and services due to lockdowns. Ironically, the globalized manufacturing by many businesses presented this shortage since many factories and production plants have, over the years, relocated to foreign countries. This offshore manufacturing has dramatically contributed to the lack of crucial products such as masks, testing kits, and protective clothing for the country's healthcare industry.

The US now needs to put in place infrastructure to ensure the manufacturing of goods and services is localized and not in foreign countries. Further, firms need to return to a result-based approach concerning manufacturing. With the ever-increasing power of shareholders in manufacturing firms, such businesses have to remain focused on their businesses' manufacturing aspects rather than elements like branding and marketing.

No wonder manufacturing firms are now cutting down costs to rebound from Covid 19 effects. This cutting down has resulted in job losses, but it has also helped streamline services. Cost-saving to channel the money to marketing and sales elements is crucial. Why? More businesses seek to recoup losses experienced due to the pandemic. Further, digital marketing is now an essential aspect of manufacturing businesses that previously relied mainly on face-to-face methods to reach their customers. Also, e-commerce has become a vital business model aspect since more firms are adopting drop shipping business practices to diversify their portfolios.

Also, investment in innovation programs and research and development is now an essential aspect of the manufacturing sector. Covid 19 has given firms an eye-opener on how important research and development is vital for businesses' growth. Patent protection and intellectual property protection are now crucial to the success of a firm's products and services.

We all know it- Covid 19 is still with us. Therefore, the manufacturing sector will need to ensure workers' health and safety standards are upheld, with modifications to ensure high sanitization levels in the workplaces. Hand sanitizing stations and shift rotations to enforce social distancing will be crucial to prevent virus outbreaks. Notably, employee safety will continue to be essential to prevent work injuries and incidents.

Diversification of products and services is vital for the sector, and Covid 19 has presented challenges to firms that deal in single product lines. Despite diversification being a capital-intensive endeavor, it is a cost-saving undertaking to ensure a business's cash flow. This diversification will enable manufacturers to have a contingency plan to fall back on, as no one when Covid 19 will be no more. Of course, change management will be necessary during this diversification, as managers will have to learn new practices and philosophies of executing the new order of business.

We shouldn't forget that government policies regarding the manufacturing industry will need to be changed to suit these uncertain times. The manufacturing sector suffered immensely due to the pandemic, and many firms suffered with it. What can be done? Low-interest loans for the industry would be a significant injection to revive many businesses. As the demand for products continues to rise, the industry will have to meet this demand, and this will require a lot of cash infusion into the industry. The government's incentives to the industry, characterized by tax holidays, research, and development tax credit, will contribute significantly to this sector's expected comeback.

Without a doubt, the coronavirus pandemic has slowed down economic growth in the United States and globally. In 2020, business activities countrywide slowed down due to the lockdown measures. Notably, the country's GDP dropped by more than 8%, which has been the country's worst, dating back to 1945. According to experts, unemployment rates will increase by as much as 50% this year as the economy continues to recover. As the vaccine is released into the market, these numbers could rise phenomenally.

Lower interest rates

The government has put in place interest caps to ensure loan interest rates remain low and accessible to businesses to spur economic activity. The Federal Open Market Committee stipulated that the interest rates' capping will stay at 1%, and this will last- at least- until 2023 until the country's inflation rates hit 2%. Further, through quantitative easing, the government announced US treasury bonds purchasing to spur more lending and investment activities around the country.

Higher Oil and Gas prices in the country

Crude oil and gas prices will increase by $6 to $49 per barrel as compared to 2020 prices. Statistics from the Energy Information Administration (EIA) suggest that, as the economy reopens and economic activity begins to spur, the oil demand will rise significantly. This demand might contribute to a considerable price rise. Generally, due to the pandemic, commuting to work may have reduced as more people embraced working from home. However, demand for fuel in the aviation industry will push this demand upwards, with expected levels getting significantly higher in 2021 compared to 2020.

Ecommerce growth

Ecommerce growth is expected to increase this year-the pandemic has made this increase possible. Projections show that about 16% of the goods are bought online from e-commerce sites such as Amazon and Alibaba. Stores' sales have, on the other hand, experienced a decline in sales, as more people have become dependent on online shopping. Also, online grocery shopping experienced a 50% growth, and this has been the most significant jump in any sector in the consumer goods category. More people will continue to use online e-commerce platforms this year, which will provide jobs for cadres like delivery drivers.

Developed Healthcare

The healthcare industry has proved to be critical, especially with the Covid-19 pandemic, which-ironically- exposed the industry's weakness. With the vaccine hitting the market soon, the healthcare industry will have to get streamlined to distribute this vaccine effectively. Further, the pharmaceutical industry will play an essential role in the success or failure of this vaccine. Contingent plans will have to be in place to ensure the healthcare industry can handle the ongoing pandemic while ensuring the new vaccine gets administered to citizens.

Increased inflation Levels

Some analysts expect inflation in the country will rise, with others predicting a 2% high in the coming months. The pandemic has significantly slowed business activity- this contributes to the expected high inflation rate. Most businesses slowed down in 2020, and others completely closed due to low demand. The hospitality industry got hit the most, with hotel prices falling by over 10% and airline prices falling by a whopping 25%.

Lockdown measures, if upheld, would make the coming months more challenging, and inflation will rise as commodity prices continue to grow. Businesses will have to raise their prices, even as the vaccine presents an opportunity for the country to reopen fully. The fiscal stimulus might-ultimately- lead to higher inflation, as the dollar's stability takes a hit.

Rethinking of the manufacturing industry

The pandemic has made many industries rethink how they operate, and the manufacturing industry is no different. The lockdown crippled the manufacturing industry. Why? It's mostly labor-intensive. Manufacturing firms now have to rethink ways to implement technology to enhance reliability and efficiency. Robotics and computer-aided designs will-likely-begin to be more complemented by businesses.

Collaborations between manufacturing firms and technological entities should become a new norm, as companies realize how labor-intensive designs can be fatal, especially in situations like the ongoing pandemic. Also, an increase in the demand for products and services has made the manufacturing industry experience some growth. This growth can be useful for the industrial development momentum. Notably, human resource restructuring is now a huge factor in minimizing costs as many businesses experienced massive losses due to the pandemic.

While coronavirus greatly affected the US as a nation, the country's financial sector was equally hit. For instance, the stock market experienced high volatility periods, with stocks experiencing peaks that caused them to be overvalued by more than 58% as of February last year. It continued to experience lows of over 30% by the beginning of 2020. This volatility made it hard for many companies to survive, especially small businesses. The pandemic also resulted in more people making money off cryptocurrencies like Bitcoin, which has steadily risen during the pandemic.

As time moves, cryptocurrencies have become more popular- more businesses have embraced them as a payment method. Think of it- the value of Bitcoin has been positively unaffected by Covid-19; this has made it a safe financial bet. Further, more people in the US have embraced bitcoin as a valuable investment, and business moguls such as Elon Musk have embraced the use of this currency. Also, Bitcoin's easy liquidity has made it a haven for people to profit, especially with the effects of unemployment.

In 2020, unemployment levels reached an all-time high; obviously, this was due to the pandemic. Many people lost a source of income, prompting the government to provide fiscal stimulus programs to enable citizens to survive during the pandemic. This action enabled economic activity to continue during the pandemic, even though experts expected the economy to face higher inflation levels -notwithstanding the stimulus programs.

Further, consumer spending fell by over 7%, as more people lacked the finances to have significant purchasing power. Due to this reduced spending power, many businesses closed down as they lacked customers. Countrywide lockdowns resulted in the decline of shopping malls and stores. Interestingly, in the months after March 2020, the number of online shoppers increased as more people relied on e-commerce stores to acquire products and services.

Currently, most businesses are taking loans to facilitate or revive the fortunes that suffered due to the pandemic. Also, banks' loan interest rates have been capped to ensure small businesses fully restore their operations using such loans. Eventually this would spur significant activity. Many businesses' financial expenditures are restricted, with leading enterprises looking for ways to save money. Cutting down costs is the order of the day as many companies are actively looking for ways to streamline their services.

Consider this: News of the new vaccine has provided a much-needed impetus to the country's economic activity. More businesses are now opening back up in anticipation of the return of normalcy to the business world. Ultimately, this means more money supply in the national economy. Generally, customers must revert to physical store purchases- this was impossible during the recent lockdowns. Employment levels will-likely- begin to spike up, enabling people to have income sources that were lost. Analysts expect household spending power to be on a steady rise in the coming months as the economy gradually opens. However, the price of this vaccine will primarily determine whether economic activity spurs back or not. Naturally, pharmaceutical companies- and others- are determined to make their profits- this will impact how the businesses thrive.

What about the manufacturing and production sectors? These were massively hit by the pandemic. Manufacturing declined sharply after March 2020, which meant the loss of many jobs. Of course, loss of employment often results in a general lack of financial power. This decline resulted in businesses slowing down due to an unusual lack of economic power. In the post-2020 period, many manufacturing businesses had to evaluate their business operations- the pandemic had graphically demonstrated how labor-intensive structures could have massive downsides. However, financial investments will continue to be crucial for all businesses that wish to invest in technological improvements and operations like computer-aided machinery, robotics, and Artificial Intelligence deployment (AI).

Ironically, during the pandemic, many people's saving ability-countrywide-improved significantly, up to 33%. Actually, many people spent less of their income during this period than they usually would. Analysts attributed the high savings rate is the lockdowns. Further, many realized they did not need lots of goods and services that they previously thought were indispensable. Also, due to the loss of jobs countrywide, most people became more stringent with their spending. Such income inequalities contributed to the high savings rate. Why, many low-income people have had to ensure they had a way to cover their bills.

The US job market certainly took a significant hit due to the pandemic- millions of people lost their jobs. Fast-forward to 2021; the economy is opening up gradually, and activities are picking up; yes, there is hope for the nation's future. However, businesses have to rethink their human resource structures; of course, this comes at employees' expense. As a glad tiding, unemployment rates have fallen by over 6.3% (according to data from the labor department). More people are getting employed, and jobs lost during the pandemic are slowly but surely coming back.

While people all over the country are returning to work, news of the incoming Covid-19 vaccine has been one of the most significant boosts to the lowered unemployment rates. Sectors such as education have experienced more employment- over 40,000 people have gained jobs in the industry. Businesses are now reopening, and this provides a boost for the employment numbers.

Ironically, the e-commerce industry has experienced a significant boost even during the Covid-19 pandemic. E-commerce activities grew massively during the pandemic to a ten-year high of 33%. This growth has provided job opportunities in the sector, and experts predict it will not slow down anytime soon. With the development of technology, more people will adopt online shopping for their daily activities, and this will be incredibly beneficial for job creation in the e-commerce sector.

The healthcare industry experienced a lot of difficulties in 2020, especially with the pandemic. Today, however, there is a great demand for healthcare workers. Data from the bureau of labor statistics indicate that healthcare industry jobs will experience an over 14% growth. Battling the pandemic left the industry with a vast gap that needs filling. Further, there is a need for research and development professionals in the medical industry, even as the Covid-19 vaccine hits the market. Scientific experts and similar scholars will be crucial in administering and overseeing the dispensation of the Covid-19 vaccine.

Technological innovation has become a crucial part of businesses, and this presents a robust job climate. Also, as more enterprises rethink their business strategies, digitizing various business processes has become the norm. More people will have to adapt to this new normal, especially as the country continues to put in measures to fight the ongoing pandemic. Working from home is now standard, and this will present more job opportunities for people, unlike the traditional office setup. Sectors such as finance will-likely- provide more remote jobs as the year progresses.

In 2021 and beyond, remuneration for jobs will be standardized since those working at the office or remotely will be doing the same load of worth. Indeed, remote jobs have enabled businesses to pay employees remotely- the same way they would pay them traditionally. Also, as more companies adopt remote working, the workforce will easily access more jobs. Freelancers- the so-called digital nomads, can now get work from remote companies and get well compensated for their services.

Think of it: Savings by Americans has been at an all-time high, with data from the Bureau of Economic Analysis showing that saving rates are at an all-time high of over 30%. Such savings have enabled many Americans to eke out a living in sectors like the stock market. Moreover, cryptocurrency trading has become a booming business, with currencies such as Bitcoin hitting high levels. More people have begun to engage in financial trades; this was notable during the recent GameStop shares trading. Yes, more people are now creating jobs for themselves.

Ultimately, the retail sector has begun picking up, with data showing that retail sales during January experienced a 5.3% increase. The trajectory will likely continue in the coming months. True, the US government's stimulus strategy may have played a massive role in this spike; well, this is good news for America's job market. The retail industry provides lots of jobs for the economy, and- as more customers begin to spend their cash- this will significantly boost the country's job climate. Also, restaurants have gradually resumed services; this means more jobs for the economy. Consumer spending has provided a much-needed shot in the arm for the job market, and it is expected this job increase will continue as the country gradually reopens.

Good News: US Bank Deposits Go Up 21.3% to Hit a Record &16.2 Trillion

In the wake of the on-going pandemic and its devastating consequences in the US, there seems to be good news sweeping across the nation- bank deposits are steadily going up, and things are slowly stabilizing. Americans' total bank deposits increased to almost $16.2 trillion (a 21.3% increase compared to the previous year). Most economic analysts are upbeat the US economic metrics are finally getting positive. Is this surprising?

Think of it: In recent weeks, going up to January 2020, the numbers for building permits, existing home sales, and housing stats got more robust. In fact, the estimates for manufacturing and other services indicate an impressive expansion far above the projections by Wall Street gurus.

And the glad tidings don't end there- the overall measures of business activities drawn from different regional outposts mostly point to promising activity. The situation is far better than what many thought would be the case. Admittedly, while unemployment levels in the US are still higher than what's generally acceptable, the claims for unemployment or joblessness (submitted to government agencies) are now lower than what most analysts expected. Of course, we cannot expect the economy to come full circle just yet. Yes, we can only hope this will happen once the government cares entirely for the most vulnerable.

But the big question is: How can the government accurately target the most vulnerable and impacted people? Think of this: Almost 500,000 people lost their jobs in December 2020. At present, almost 16 million people are sustained by benefits given by the government to the unemployed. As noted, the number of those still dependent on such tickets has gone down significantly; regardless, millions of Americans will continue to rely on multiple agencies for daily survival- and this will go on for quite a while.

But- as they say, behind every cloud is a silver lining. As of January 2021, the rest of the US economy seemed to be getting more vibrant by the day. Considering that the most affected citizens have benefitted from two separate government stimulus packages worth over $3 trillion, is it surprising? As a result, many US households have witnessed a significant strengthening of their financial and economic prospects. These dynamics cannot be taken for granted. The country now enjoys hitherto unprecedented levels of low-interest rates and bond-buying worth trillions of dollars. Yes, these factors characterize a new degree of Federal Reserve monetary goosing.

Further, to return the economy back on track, there has been an unusual array of lending programs that aim to return the economy to the levels that existed before the coronavirus struck. Interestingly, the Fed is now purchasing bonds at a closer pace- approaching $1.5 trillion each year. What does this say about the ordinary American's overall economic situation? It says this: Things are getting better and becoming more promising as the days pass.

Consider the following data: Between January- February 2021, Americans' bank deposits went up to almost $16.2 trillion. This represents a 21.3% increase compared to what the situation was just a year ago. In fact, many institutions of Wall Street are witnessing unexpected record highs. Of the promising bank deposits, we have some $1.4 trillion in what is referred to as "excess savings" by BofA; these are likely to rise to $1.6 trillion as the government continues to distribute more checks from the earlier $900 billion stimulus package passed by Congress.

Further, according to the Bank of America Global Research, this is not all: There's a general surge in spending. Moreover, debit and credit card expenditures have gone up by 22% over the year (up to January 16, 2021) for low-income individuals who benefited from the last round of stimulus payments. Interestingly, according to the bank source, "most US households have more cash now than they've ever had. Yes, they're extraordinarily cash-rich." The Pantheon Macroeconomics chief economist Ian Shepherdson recently said this in a webinar session: "Thousands of US households now have a ready war chest that they're ready to spend as soon as possible. Once the Covid fear is effectively gone, we can assume more people will be ready to spend as much as they can."

According to Shepherdson, the rate of inflation is likely to accelerate. This would force the Fed to reconsider its overly-accommodative policies. Eventually, they'll be forced to tighten things much sooner than the market expected.

Is The US Government's Economic Recovery Plan "Over- Ambitious?"

Is the new US government's newly launched economic recovery plan overly-ambitious? Is it probably too big? While some experts and analysts think this is the case, others don't quite agree. For instance, Jonathan Parker, who serves as Professor of Finance at the MIT Sloan Management School, poses a pertinent question: 'What should be foremost in our minds as we define the much-touted US government's recently announced stimulus package? Are we in a situation where we need to effect an economic shutdown until we receive the eagerly-awaited coronavirus vaccines, or should we try to stimulate the national economy right away? Professor Parker is a renowned researcher and an expert in government stimulus issues for several decades. "Well," the scholar concludes, "I'm convinced and believes it's actually the former."

Speaking about the issue, Ms. Esty Dwek, who's the Natixis Investment Manager's head of global market strategies, had this to say: " We generally expect that the equity market will stumble as investors begin to face up to the possibility of higher individual and corporate tax rates that the Biden administration is likely to push through later in the year. She, however, adds that the existing necessity overrides the long-term interests. "Of course," she was quoted saying, "as you know, there's widespread worry about the impending inflation. However, I personally don't think this will happen soon."

Joining in this positive note, the Schwab Center Vice- President of Trading and Derivatives, Mr. Randy Frederick, notes that President Biden's stimulus plan "is directly in line with the widespread expectations of the market." "Likely," Mr. Frederick said," other packages on infrastructure and priority spending will soon follow the stimulus plan." This is excellent news to suffering sectors of the economy that have borne the coronavirus pandemic's brunt for more than a year.

Further, on the issue, it's worth noting that researchers don't quickly agree on the question of whether those who receive the government stimulus checks will actually spend it immediately. For example, the New York Federal Reserve Bank carried out a survey in December 2020, asking people what they'd do with a sudden 10% boost in income. Interestingly, just 19% of the respondents indicated that they'd either spend or donate the money. Even more interesting, the rest of the respondents said they'd either invest, pay debts or save. This means they won't spend immediately.

Yes, there seems to be a potent argument to target the lowest income segment using other methods- boosting the food stamp program and increasing unemployment benefits. "Moreover," according to another scholar, "it's advisable to provide a full credit on earned income tax. Once this is done, the stimulus payments will work best for the primary target groups." He says that stimulus payments can only boost growth if people are slow to resume spending even after the expected massive vaccination rollout.

In a recent analysis of the government stimulus program, researchers from the Brookings Institution said that the greatest boost to the gross domestic product would come from giving aid to most financially vulnerable families. On its part, the JP Morgan Chase Institute recently-in December 2020- scrutinized 1.8 million customer checking accounts. This is usually the first place where households or families receive and spend their money.

The researchers discovered that those who earned the lowest incomes showed the most significant gains in their findings. Regardless, they had the fastest depletion as well. On the other hand, the highest earners (or households that make over $68,000) tended to hold assets and build on them. This research concludes that the poorest people were likely to spend their paychecks as soon as they received them.

But what do some of the most recent statistics really say? Interestingly, The GDPNow Tracker indicates there was a 7.5% growth pace in the 4th quarter. This seems to be quite impressive. Moreover, the job situation in the US appears to improve tremendously by the day.

The verdict? Many analysts claim that recent data- like what's illustrated above- has continued to defy expectations and changed everything that seemed to be true only a few months back. So, is there a need for such a hefty cash infusion going into trillions of dollars, one year after the Coronavirus pandemic engulfed the nation?

Well, the Jury's clearly out.

Worries That Biden's $1.4 Trillion Package Might Miss The Target

In an unexpected fresh dilemma, US President Joe Biden's much-touted $1.9 trillion economic stimulus package is facing what some have called "a baptism with fire"- running against opposition despite holding promise for millions of desperate Americans battered by the deadly coronavirus effects.

Others fear that the President's well-meaning plan might end up benefitting the "wrong segment of society"- those who don't need it. This means it won't help the much-targeted group- the vulnerable. Despite this, the Biden administration is determined to keep its promise to offer $2,000 payments to vulnerable Americans,, revive a battered economy, and target low-income, unemployed people with this package.

Noting the raging questions and doubts about whether the money would go to the right people, President Biden recently said he's willing to enter a discussion with various stakeholders to ensure those who don't need it don't access the funds. On a positive note, likely, many needy American households will quickly spend the money received. This should instantly boost the economy- we can compare it to a situation where the government uses the payments to pay debts or boost savings. Of course, the latter is far worse.

According to the new administration's official proposals, the government plans to send $1,400 checks to the most vulnerable people- those who've borne the brunt of the pandemic effects for a long time. As noted, the President has already indicated he's willing to discuss eligibility issues with key officials and other parties. Comparatively, the previous round of the stimulus action in December 2020 dispatched $600 checks to those earning a maximum of $75,000- this translates to $150,000 for each of these households.

Interestingly, two studies that recently released their results suggest that the previous income threshold was probably too high to encourage the most spending (relating to the costs). This finding may be factored in against the popular idea that direct payments are primarily useful for boosting economic growth. Regardless of these factors, we should note that policymakers repeatedly advise consumers to limit the spread of the Covid-19 virus primarily by staying at home. This means that -even with direct payment to such vulnerable groups- few of the beneficiaries will readily spend on ordinary activities like traveling or going out for meals. Overall, even with the government's best efforts to reach the vulnerable, it's clear that the checks could still fail to get to many needy households.

In another survey by the US Bureau of Labor Statistics, most Americans would immediately spend their stimulus paychecks. 2/3 of those interviewed said that they'd use the money on food. What does this mean? It clearly indicates that the checks would actually reach the majority of the vulnerable people.

Claudia Sahm, who is a Federal Reserve expert economist on the impact of stimulus payments, said this: "One major issue regarding the matter of narrowing the paychecks is this: the government simply doesn't have all the relevant information. Think of people who lost their jobs only recently. Think of others who had a massive pay cut just the other day. Incredibly, such people may not qualify for the stimulus paychecks. Why? Their situation changed too recently. They are, therefore, unlikely to reach the crucial eligibility threshold. In a nutshell, they won't qualify."

It doesn't end there- you might find that some relatively higher-earning individuals may (ironically) be saving in a limited way, practically living from hand to mouth. Hence, while many beneficiaries may use the money to pay debts instead of saving, the overall effect is that they'll be in a better financial situation than before. This is what economists call "financial resilience." During crisis moments, this is quite important to the dynamics of the broader economy.

Parting shot? Do you seek the biggest bang for your buck? Give the money to those who have the lowest balance in their bank account. Unfortunately, according to Mr. Sahm, the federal government has no such information regarding the potential beneficiaries. Instead, the expert vouches for one-time paychecks, and automatic stimulus payments that he says are way more beneficial. He also warns that the possible fixation with targeting the "right people" might end up denying the same target group of the much-needed resources.

Wall Street Celebrates Biden's $1.9 Trillion Stimulus Package But Fears

Things are now crystal clear- it's not all cheers for US President Joe Biden's newly launched historic $ 1.9 trillion coronavirus stimulus package; indeed, many describe this as "the investor's- double-edged sword" with many unintended implications. Of course, the new President's widely hailed economic stimulus plan- post the Trump administration – holds the potential to boost economic revival. But, as noted, most analysts are anxious about just how the nation will pay for this unusual package.

Ironically, the Wall Street gurus eagerly anticipated the new President's stimulus bold plan. No wonder, in the weeks after the Democrats seized control of the US Senate in early January, pundits noted that news about the much-anticipated stimulus package was directly instrumental in lifting the broad S& P index by almost 3%. Yes, this was widely hailed as positive- and most welcome- news.

But the unexpected was yet ahead- For starters, Bond yields are known to move inversely to prices. Hence-unsurprisingly- the impending moves - would be characterized by a significant slide in Treasuries. Why, pundits well understood that the only way the government could raise such funds was through creating more debts. Of course, such a move would push the crucial yields of benchmark 10-year notes to the highest levels. In turn, this would nudge the borrowing costs higher throughout the economic spectrum.

Soon, some industry insiders felt free to predict the apparent trends. For instance, Jeff Buchbinder, who is the LPL Financials' equity strategist, had this to say: "At the moment, the markets are generally celebrating the expected stimulus. Most analysts consider this a sure bet and a strong bridge leading to a fully reopened national economy. Regardless, there's a sobering chance that- on the other side- the markets should prepare to pay for this. How? "Simple: in terms of tax hikes that might cap equity valuations or much higher interest rates," he said.

Not surprisingly, already some investors are getting anxious about stock evaluations. Yes, many worry that- in the coming year- the earnings must be particularly strong; this is the only way to justify the hefty multiples. Significantly, the S& P 500 is already at about 22.3 times the forward earnings estimates. According to data from FactSet, this is nearly equal to the March 2000 all-time high of 24.4.

Interestingly, in December 2020, even before the new admiration had taken over, the S& P had dipped by almost 0.4%. By the beginning of January 2021, this went up by about 1.1%. We must also note that the year's rally was primarily characterized by cyclic stocks that typically benefit from stimulus package dynamics. Obviously, this includes banks- significantly, the banks have been up by more than 10% for the year, down to our times.

In the meantime, over the same time, the technology sector- which is among last year's winners- is down by almost 1%. There's no doubt that rising yields are now threatening to weigh heavily on longer-duration cash flow companies, including growth shares and tech.

Furthermore, pundits note that President Biden's bold economic stimulus plan- anchored on a courageous rescue package- is coming at a moment when companies and investors are forced to go back to the drawing board regarding their estimates on the projected time for the end of the pandemic. It's also coming when the US- like other leading nations- is slowly rolling out the Covid-19 vaccination program.

According to the US Labor Department, In January 2021, the initial unemployment rose considerably to 965,000. This is the highest level since August 2020. It's also-clearly- above the 795,000 figure earlier quoted by leading economists who spoke to Reuters. And in December 2020- for the first time in 8 months- the rate of job losses fell slightly, giving a ray of hope to many.

Regardless, as noted, rising bond yields are-in the meantime- raising anxiety about a looming inflation post the projected economic recovery schedule. Despite this, the US Federal Reserve Chairman, Mr. Jerome Powell, recently said that he doesn't expect the Central bank to commence the trimming of the monthly bond purchases "prematurely." Instead, Mr. Jerome said: "We should begin talking about the exit now- this is the right time."