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During his Republican National Convention speech, White House economic adviser Larry Kudlow said the economy is booming.
“There’s a housing boom, there’s an auto boom, a manufacturing boom, a consumer spending boom, stocks are in record territory,” he said. “A V-shaped recovery is pointing to better than 20% growth in the second half of this year.”
Now, that 20% growth projection is optimistic at best, and given the baseline it’s coming from — the depths of the pandemic’s economic shock — there’s a lot of relativity at work there. It’s still not exactly a healthy economy when we’re losing about a million jobs per week.
But to his point about the V-shaped recovery, there are certainly some positive signals in this economy. Take Wednesday’s numbers on durable goods. They came in nearly double what analysts expected — orders were up 11.2%.
Economists and analysts look at orders for “durable goods” to get a read on how willing people are to spend on big-ticket items that last a few years, like refrigerators, office equipment and cars.
“I think there was pent-up demand in autos,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “People had been putting it off for a number of months, and the carmakers are offering very strong deals.”
The uptick wasn’t driven just by cars. Shipments of business machinery were also up.
“We’re about the level of capital goods shipments that we were at before the pandemic,” said Daniel Bachman, an economic forecaster for Deloitte.
“And that I consider to be very positive, because it does suggest that U.S. businesses at this point believe that it’s worth it for them to continue investing,” he said.
Which is good news, at least in the manufacturing sector. Abdou Ndiaye, professor of economics at New York University, said manufacturing, though, isn’t the big concern right now.
“Because this is not a sector that’s hurting,” he said. “We know that spending on services has plunged, which is being led by a large drop on restaurants and recreation mainly.”
And that’s because of the pandemic.
“It’ll be very hard for the economy to really start recovering until we have a solution to the health problem,” Bachman said.
But you’ll still probably hear politicians talking about a V-shaped recovery right up until Election Day.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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