Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Friday, Mar 29, 2024

Trump says the economy is booming. He's right - but you don't feel it

Trump says the economy is booming. He's right - but you don't feel it

President Donald Trump touts the economy's quick recovery as evidence of his administration's success. He's not wrong, but it's not the full picture.

Federal Reserve Chairman Jerome Powell spent all last week testifying about the recovery on Capital Hill. His message: This is a tale of two economies, and one looks much stronger than the other.

On paper, the economy is roaring back even stronger than Powell and many economists expected.: More than 22 million jobs vanished in the spring lockdown, but 10.6 million jobs have since been added back.

And US gross domestic product - the broadest measure of the economy - is expected to rebound sharply after collapsing at a revised, annualized and seasonally adjusted rate of 31.7% between April and June. The Atlanta Fed's GDP Now model predicts GDP will jump at an annualized and seasonally-adjusted rate of 32% in the third quarter.

But that's only one side of the story.


The other side

Many shops are still closed. About 11.5 million people who became unemployed because of Covid-19 remain out of work. And next week, unless Congress acts to provide more federal help, up to 100,000 airline industry jobs may be lost after the expiration of the CARES Act, which provided a $50 billion bailout to keep US airlines afloat.

Meanwhile, the sugar rush from Congress's initial stimulus has worn off. Without more intervention we could be in for a long winter, especially as Covid-19 infections are rising again in some parts of the world.

"The risk going forward is that people are spending [now] because they have money in the bank even though they're unemployed," Powell said.

But once that money runs out, people might start scaling back their spending - a potential body blow to the recovery given consumer spending is the economy's biggest engine.

Retail sales, one measure of how Americans' spending behavior, have bounced back, recording their biggest monthly surge on record in May. But while the data has gotten better in the following months, the pace of improvement has slowed.


Fears of funds drying up

One possible reason is that unemployment benefits are now lower: a supplemental $600 in weekly jobless aid, part of Washington's first stimulus bill, ran out at the end of July, and Congress hasn't agreed on a new stimulus deal.

President Donald Trump signed an executive order to bolster benefits again, though by $400 a week this time, by diverting money from the Federal Emergency Management Agency. FEMA said that some states have already exhausted their allocated amounts.

Meanwhile, businesses using the Paycheck Protection Program to make it through the worst months of the crisis are worrying about funds drying up.

Problems like these underscore the importance of Congress taking action - and soon.

"I do think it's likely that additional fiscal support will be needed," Powell reiterated before the Senate Banking Committee on Thursday, even though the recovery will ultimately depend on the path of the pandemic.

If Washington fails to agree on more stimulus the fourth quarter of this year, as well as 2021, could look much weaker than expected, said Gus Faucher, chief economist at PNC, in a note.

But now that lawmakers are more focused on approving a new US Supreme Court justice, worries are growing that no further stimulus will be passed until after the election.

Experts at Oxford Economics still believe a $1.5 trillion stimulus package could be agreed upon before the election on November 3.

But the window to get a deal done is closing fast and will require that rarest of commodities in Washington: compromise.

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×