There has been excitement about the $1.9 trillion American Rescue Plan Act expected to pass through Congress this week.
“To have a stimulus package of this nature on the scale of Roosevelt’s New Deal, is quite a remarkable accomplishment,” Connecticut Congressman John Larson said during a news conference about the bill.
Larson and his fellow members of Connecticut’s U.S. House delegation said the approximate $4 billion in direct aid to Connecticut will assist with everything from helping people pay for health insurance, to assisting sagging pension funds, to supporting struggling municipal governments.
At the same time, others have expressed concern pumping this much money into the economy could cause runaway inflation and reduce the impact of the pandemic aid.
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Economists both here in Connecticut and nationwide have warned there could be a steep price to pay for this massive stimulus program; inflation.
Right now inflation sits at 1.4%, but Quinnipiac University finance department chair Osman Kilic said it’s on the way up.
“Inflation is picking up we already have an inflation in the food prices.”
Osman added that what goes up, does not always go down, at least quickly.
“The issue with the inflation prices are sticky once you get it stays it's difficult to break it so these are the dilemma that we face.”
Other financial experts have said we may just have a brief inflation bump right when the stimulus money gets pumped into the economy, based on some current leading indicators.
Nuveen Funds CIO Saira Malik said on our sister network CNBC, “We're not seeing a lot of wage inflation right now which is why we're not concerned that inflation is if he is going to become very hot in the near term.”
When asked about inflation concerns at the same news conference as Larson, Connecticut Congressman Jim Himes admitted, “The the issue you raise is a fair one.”
Himes said while inflation has historically been tricky to manage and could go the wrong direction, he believes it’s a risk worth taking.
“We’re not going to risk going too small, and if we do start to see inflationary pressures on the economy, the Federal Reserve has a lot of tools to begin to address it. But just because it’s a risk, doesn’t mean we shouldn’t go forward with what the American people need today.”
Members of Congress will have a better idea of just where inflation stands before they vote.
The Bureau of Labor Statistics has a scheduled release of new inflation figures, which is expected to happen before the roll call on the American Rescue Plan Act.