Survey: Business economists favor increased federal spending

WASHINGTON (AP) — A majority of business economists think the recovering economy will benefit from much more government spending despite concerns in financial markets that the $1.9 trillion COVID-19 relief measure Congress recently enacted could ignite inflation.

That's the view that emerged from a survey released Monday by the National Association for Business Economics of 205 forecasters. The economists were polled while the new relief measure was under consideration in Congress but before it was signed into law.

The relief package, proposed by President Joe Biden and backed only by Democrats in Congress, is distributing $1,400 checks to most adults, renewing federal aid for the unemployed and supplying another round of help to small businesses, among other things. But some economists and many Republicans have expressed concern that the size of the package could accelerate inflation and potentially force the Federal Reserve to raise interest rates prematurely.

Yet among the business economists surveyed by the NABE, 41 percent describe the government's current fiscal policy, including such spending, as “about right,” and an additional 25% call it too restrictive. Only 34% characterize the current fiscal policy as too stimulative for the economy, though that figure is up sharply from the 17% who said so in August, when the NABE conducted its previous survey.

Last week, the Fed issued forecasts from its policymakers that showed they expect to keep their benchmark short-term rate near zero through 2023. But the NABE survey found that the vast majority of the respondents believe the Fed’s first rate hike will come earlier, with nearly three in five predicting that the central bank will start raising rates before the end of 2022.

The survey found that 12% of respondents think the Fed will even start hiking rates...