I don't know why some people treat the coronavirus stimulus as though it existed in a vacuum when discussing inflation.
The pandemic caused a global supply shock, a collapse in demand, and a spike in unemployment. The coronavirus stimulus was meant to help avoid another Great Recession of persistent reduced growth and persistent high unemployment. The counterfactual wasn't an environment of high growth and low inflation, but a severe recession.
We saw demand and supply recover, but the demand recovery was much quicker and stronger.
The pandemic also caused a shift in the composition of demand. We saw demand for goods spike relative to the demand for services in the beginning of the pandemic. Mixed with the stimulus this exacerbated the demand shift.
And we had significant changes to the labor supply from the pandemic. We had many workers quit and shift to other jobs, or retire early. We saw immigration plummet. We additionally had direct COVID burdens on the labor force.
I think if I had a time machine I'd probably have done the stimulus differently, though not eliminated it. More direct employment/wage support than just stimulus payments.
I think the easiest way to make it more efficient would have been to target more directly the affected businesses/employees. We may not have had the time for means testing but we certainly knew what sectors were incurring the most damage from the pandemic (restaurants for example).
I just saw this as I was walking away to grab my dinner, which is just finishing, so I can't get in deep. I will just say that demand was always bound to rise faster than supply given one is just what people want/are willing to buy, while the other actually takes effort and resources to create...which were lacking because of the pandemic in the first place. I just wish I would have seen it coming...
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit