The Memo: Economy faces new dangers from COVID-19
Economic experts are increasingly worried about the possibility of a double-dip recession, a scenario that would make the first months of President-elect Joe BidenJoe BidenHouse Hosts Friday’s Votes For Biden’s Agenda House Leaders Make Last-Minute Drug Prices Change After Aid Dispute That Traveled With Biden To Europe Tested Positive For COVID-19: PLUS reportsThe weather in the White House is even tougher.
Concerns are growing even as three separate COVID-19 vaccines have shown very promising results.
The news of the vaccine has compounded an incongruity in the economic situation.
The stock market has been propelled to new highs despite high unemployment, lower consumer confidence and public health warnings of the darker death toll from the pandemic in the coming weeks.
Republicans, including President TrumpDonald Trump White House asks Senate Democrats to meet with Powell this month, highlighted the performance of the stock market in seeking the rationale for their policies.
Rep. Andy Biggs (R-Arizona) tweeted a story last week about the Dow Jones Industrial Average closing above 30,000 points for the first time, adding: “The US economy has seen incredible momentum since then. [President Trump] took office thanks to his commitment to the growth policy. Trump retweeted Biggs.
But Mark Zandi, chief economist at Moody’s Analytics, said there were already signs of the economy slowing – and that he expects to see more evidence like this when the latest monthly figures from l Jobs will be published Friday by the Bureau of Labor Statistics.
The unemployment rate in October was 6.9%. It was well below the pandemic peak of 14.7% in April, but it was almost twice as high as the unemployment rate of 3.5% in February, before the pandemic hit full force.
The centrality of economic issues to the political landscape was highlighted on Tuesday as Biden introduced key members of his economic team.
Janet YellenJanet Louise YellenWhite House asked Senate Democrats to meet with Powell this month: report Democrats call on Biden to sanction climate change contributors Ocasio-Cortez: pass both Biden bills “the bare minimum” to fight inflation PLUS, Biden’s choice to head the Treasury Department – if confirmed, she would be the first female Treasury Secretary – said “we are again facing historic crises.” Yellen also issued a warning that “inaction will produce a self-reinforcing slowdown.”
It is a widespread concern. Congress has yet to pass a new coronavirus-related stimulus bill. Negotiations bogged down on the cost of such a bill, with Democrats favoring a bigger package and the Senate majority leader Mitch mcconnellAddison (Mitch) Mitchell McConnellGood Republicans in Government Could Be Democracy’s Last Hope Manchin denounces ‘hostile’ political environment ‘Earthquake’: GOP soars high after Democrats bombing on Tuesday MORE (R-Ky.) Balks.
McConnell told reporters on Tuesday that it was likely that any measure against coronaviruses would come as part of a year-end omnibus spending bill that must find its way to the president’s office by the December 11.
Earlier Tuesday, a bipartisan group of Capitol Hill lawmakers offered a $ 908 billion compromise.
But passage is not guaranteed for any proposal, and there are concerns about other support measures that will be phased out soon.
A number of emergency loan programs had been put in place earlier in the pandemic, many of which were facilitated by the Federal Reserve and the Treasury Department. But at the end of last month, the Secretary of the Treasury Steven mnuchinSteven Mnuchin Large Russian Hack Group Linked to Sinclair Ransomware Attack: The Hill’s Morning Report – Presented by Alibaba – Biden Engages in Frenzied Talks over Dem spending Former Treasury Secretaries Tried to Resolve Deadlock on debt limit in talks with McConnell, Yellen: MORE report said the programs would end at the end of this year.
The Fed, led by Jerome Powell, has made it clear that it would have preferred the programs to remain available.
Mnuchin and Powell both testified before the Senate Banking Committee on Tuesday.
Mnuchin offered some optimism about the economy, but Powell said the outlook was “extraordinarily uncertain.”
Despite their other differences, Powell and Mnuchin agreed on the desirability of an additional stimulus. Powell told the Senate panel that “some tax support now would really help move the economy forward.”
The problem is, the economy can’t really move forward when COVID-19 has such a catastrophic impact.
The pandemic has now claimed nearly 270,000 lives in the United States and a total of 13.6 million people have been infected here. Infection rates and death rates are increasing across the country.
As of Monday alone, more than 1,200 people have died and nearly 168,000 new cases have been recorded, according to the New York Times.
Kavita Patel, a non-resident Brookings Institution healthcare scholar, noted that restrictions were already tightened. She said she had some optimism for the longer term, until 2021, but at the moment she was deeply concerned about the skyrocketing.
“I don’t know what Christmas is like” in terms of a pandemic, Patel said. “No one wants to talk about a national lockdown, but we might need something close.”
As a practicing primary care physician, Patel’s primary concern is the human toll imposed by COVID-19. But she recognized that “medicine is linked to economic prospects. We will not have an economic recovery until we have confidence in our medicine. “
That confidence is growing, at least, with the three vaccines that have shown so much promise. Even if only one is fully approved, vaccinations for high-risk groups could start before the end of the year.
But experts like Patel have said Biden could face a grim scenario when he takes office.
“We could be looking at 250,000 to 400,000 cases a day by January 20,” she said, referring to the day of the inauguration. “They’re going to have to deal with these issues directly, and the way to deal with them is with a national plan.”
Biden came up with such a plan but it offers no miracles, relying instead on improvements in testing, contact tracing, and provision of proper equipment to frontline workers. Biden also said he would pressure governors to enforce the wearing of masks.
The stock market rose again on Tuesday, with the large-scale S&P 500 closing at a record high.
But that’s another story in the wider economy as the pandemic rages on again.
Biden faces enormous challenges and any recovery will take time, experts warn.
“It’s not just about avoiding the recession,” Zandi said. “It’s about getting back to the economy we had before the pandemic hit anytime in the near future.”
The Memo is a column published by Niall Stanage, focusing primarily on Donald Trump’s presidency.