The US economic rebound has become very difficult since the initial series of benefits from the depths of the epidemic.
Applications for regular state unemployment benefits continue to exceed 800,000 each week and prospects in Congress Thursday reduced to additional support for the unemployed and businesses. Funding for temporary supplementary unemployed benefit payments authorized by President Donald Trump in early August is getting higher.
With the help of fiscal stimulus – ranging from assistance for small businesses to an additional $ 600 a week in unemployment benefits – the US economy has reborn faster than many economists have. However, maintaining a strong momentum can prove challenging given the elevated unemployment rate, absence of additional government support, and the continued proliferation of coronaviruses.
Gregory Dako, chief US economist at Oxford Economics, said that this recovery is “fragile right now, and prevents excess stimulus; this recovery is negative.” “There is no doubt that the complete cessation of unemployment benefits will weigh on household income and in turn consumer spending.”
Deutsche Bank AG chief US economist Matthew Luzetti said consumer spending could increase in the coming month without Congress’ help. Anita Markowska, chief US financial economist at Jefferies, expects to pinch felt it In October, a month before the election there is no additional stimulus if accompanied by a “significant risk” of soft data.
The week coincides with the reference period for the September household survey of jobs report, which reported data such as the unemployment rate.
The August report found the unemployment rate to still be much lower than at least 8.4%, an estimate that likely came to deal with some pressure from lawmakers. On October 2, the September employment report will be final before Election Day.
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Markowska said domestic spending may not increase until next month due to disbursement of the Lost Wages Assistance Fund.
The program was created by Trump in early August, when lawmakers failed to extend an additional $ 600 in weekly unemployment benefits that millions of unemployed Americans came to rely on during the epidemic. It authorized the Federal Emergency Management Agency to grant what would eventually be an additional $ 300 a week for six weeks to states applying for funding.
However, logistical constraints have led to uneven rollout of funds, and many states have yet to pay any aid. As states have stated those payments, income could be boosted through September.
The labor market – and the economy generally – is recovering. Millions of Americans have returned to work, and the quit rate, or the number of workers who have voluntarily left their jobs as part of employment, Near its pre-epidemic level in July.
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At the same time, the severe impact of the fastest recession in records over seven decades old has begun to take its toll. The widespread permanent trade-off is expected to leave the economy millions of jobs below its pre-pandemic level, and in recent weeks, Host of The companies have announced plans to cut jobs.
“We should not underestimate how important fiscal stimulus is to V-shaped recovery,” said Luzetti. “We’ve had many easy benefits of this recovery since we reopened, but as we look ahead to that initial boom, things are a lot harder from here.”
Globally, the US is underestimating all its peers in terms of daily activity. Bloomberg Economics. Meanwhile, reactions of coronoviruses and state government increase current economic challenges. The new Kovid-19 cases are becoming fewer, but they continue into the hundreds each week.
Nevertheless, the third quarter is still likely to be the strongest on record. Economists at the Goldman Sachs Group Inc. have raised their tracking estimate to an annualized rate of 35% based on solid household spending data.
Although improvements in a variety of metrics over the July-September period assured strong quarter-on-quarter growth, any decrease in demand late in the quarter could ease the outlook for the rest of the year. is.