President Biden has just signed the 2021 Covid Relief Package authorizing the borrowing of $1.9 Trillion dollars. This is on top of the 2020 relief packages that totaled $3.41 Trillion dollars. Combined we will have borrowed $5.31 Trillion dollars to support individuals, businesses and the economy during the COVID pandemic. The U S GDP for 2019 was approximately $21 trillion. And Congress has already turned their sights to more stimulus, this time for an infrastructure bill. Since this was also on President Trump’s agenda, it is likely to get bi-partisan support. Throw in another trillion of debt. This is like adding the entire Japanese economy to ours for one year!

What’s the Point?

I can’t disagree with Government relief during the COVID crisis. In 2020 our economy crashed. Below is a graph from EconPi that graphs multiple economic statistics on a monthly basis. I’ve shown these several times. You can click the link for a quick explanation or to view more graphs.

Below is the graph from December 2019. The Green LD (Leading Indicators) is still solidly in the Expansion Quadrant. The Red MoC (Mean of Coordinates) is slightly in the decline quadrant, but the actual readings are well above the baseline. Meaning the economy may be slowing, but from an extremely strong position to a merely very strong position.

Here is what happened from COVID.