“They’ve thrown a lot of stimulus at it,” Hassett told CNN Business on Thursday, “but I think we need to be risk averse.”
“There are so many businesses treading water, barely hanging on. Now they are getting hit by another shock,” said Hassett, who served as Trump’s top economic adviser from 2017 to 2019 before returning in a voluntary role in March of last year. “You could end up in a negative spiral for the economy.”
“The disease is spreading in a remarkable and scary rate,” said Hassett, now a distinguished visiting fellow at Stanford University’s Hoover Institution.
Biden’s $1.9 trillion plan
Lindsey Piegza, chief economist at Stifel, worries the federal government is rushing too quickly to throw more money at the problem.
“I would like to see a smaller, more targeted approach as we see the economy evolve and adapt, rather than layering on additional helicopter money,” Piezga said.
For his part, Hassett said that there may be elements of the Biden package he likes more than others, but broadly speaking he’s “absolutely” in favor of the plan.
How vaccines and the pandemic are impacting the economy
The pandemic is clearly doing real damage to the economy, especially in virus-sensitive industries such as restaurants, movie theaters, hotels and cruise lines.
The sluggish rollout of the vaccine risks extending not just the health crisis, but the economic one as well.
Speeding up vaccine distribution is being complicated by logistical issues and the disastrous transition between the Biden and Trump administrations.
Somewhat counterintuitively, Hassett worries that the US economy will suffer another blow when vaccine distribution accelerates. He explained that people who are next in line for a vaccine, or who have already received a single dose, will be extremely careful to avoid getting infected.
“If you hide in your basement for three weeks, then you know you’re going to be okay,” Hassett said. “There will be a massive increase in risk aversion. We should expect the economy to really, really slow — even if the government doesn’t call for more shutdowns.”
Hassett predicted that after some haggling, Congress will pass another major stimulus package in the next month. He noted that Congress and the Trump administration were close to a nearly $2 trillion stimulus deal last fall.
“Now that the election is behind us,” he said, “people can focus only on what is good for the country.”