US President Joe Biden unveiled his new plans for the US economy yesterday. According to his statements, it should amount a total of $ 2.25 trillion.
"The earlier economic growths did not take into account the interests of many segments of the population. We're going to fix that, "Biden said.
The American Jobs Plan, as the president calls it, is an eight-year program that includes $ 620 billion in infrastructure and transportation investments, $ 580 billion in manufacturing and $ 180 billion in research and development. An additional $ 400 billion will go towards caring for the elderly and disabled.
Biden said this new plan is designed for those who give large contributions to the economy, not just for rich people. He also mentioned that he is completely open to alternative ideas from legislators, including Republicans, but emphasized that he will fight with all his might for the implementation of this program, which he called vital to support the US 'weakening competitiveness.
Most probably, this program will face fierce opposition from GOP lawmakers, especially since it includes tax increases and other major changes in the entire tax system. To be more specific, the new plan constitutes:
- an increase in the corporate tax rate from 21% to 28%,
- cancellation of tax incentives for a number of companies with various forms of ownership,
- increase in the income tax rate for individuals earning more than USD 400,000,
- expansion of inheritance tax, and
- higher tax rate for individuals whose annual income is at least $ 1 million per year
Republicans are categorically against tax increases. But Biden's new plan aims to close inequalities and serious gaps between the rich and the poor.
Meanwhile in the EU, the European Central Bank addressed the issue on rising Treasury yields, mentioning investors who, through speculation, are trying to achieve a further increase.
"They can test us as much as they want," ECB head Christine Lagarde said. "We have exceptional circumstances that we are dealing with right now, and we have exceptional tools that we are using at the moment. If necessary, we will resort to more drastic measures to fulfill our mandate and our promise to the economy, "she added.
Of course, such declarations put pressure on the euro, as investors did not expect to hear aggressive statements, especially since the ECB began to actively buy bonds, fulfilling the promise it made during their last meeting. They did so to counter growing borrowing costs, which threatens to undermine the EU's economic recovery.
Then, the decline in the euro is further fueled by weaker-than-expected statistics. According to the reports published yesterday, consumer prices in the whole Euro area, although increased on a monthly basis, fell short of analysts' forecasts. Inflation, meanwhile, jumped to only 1.3%, not to the expected 1.4%.
Core inflation fell to 0.9%, instead of growing to 1.2%. This suggests that inflation is largely influenced by energy prices, which showed a massive growth of 4.3%. Meanwhile, food, alcohol and tobacco increased by 1.1%, while the cost of services jumped by 1.3%.
But in France, consumer prices rose at a very fast pace, jumping by 1.1% year-on-year. This, however, is in line with economists' expectations.
As for unemployment, Germany recorded a decrease this March despite the increase in COVID-19 infections. It fell by 8,000, thereby reaching a total of only 2.75 million. The rate, however, remained unchanged at 6.0%.
A similar scenario was observed in the United States. According to the ADP, employment in the private sector rose to 517,000 this March, which is clearly higher than the expected 550,000. Then, tomorrow, the US Department of Labor will release another data on employment, but this time it will be on the nonfarm sector, which is closely monitored by traders and economists.
In the meantime, there will be data on manufacturing activity in the Euro area, which economists forecast to reach 62.4 points. A report on German retail sales will also be published, and analysts project it to come out at 2%. The US will also release data on Manufacturing PMI, as well as weekly report on jobless claims.
As for the EUR / USD pair, a break below 1.1715 will set off a further decline towards 1.1680 and 1.1640. But if the euro returns to 1.1750, price will be able to climb towards the 18th figure.
