Economics Flash - The growth implications of Biden’s Build Back Better plan

  • The Biden administration is now busy getting congressional approval for its Build Back Better plan, whose goal is to lift long-run growth via investment in physical and human capital.
  • In an economy characterized by sizable slack, both the American Jobs Plan (AJP) and the American Families Plan (AFP) are likely to boost growth, even if higher taxes partly offset the positive impact of higher spending.
  • In cumulative terms, by 2026, we expect the overall plan to increase actual GDP by 1.9% and potential GDP by 0.7%, with limited inflationary pressures.

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