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
What does the unemployment picture look like?
It depends on where you live. The national unemployment rate has fallen from nearly 15% in April down to 8.4% percent last month. That number, however, masks some big differences in how states are recovering from the huge job losses resulting from the pandemic. Nevada, Hawaii, California and New York have unemployment rates ranging from 11% to more than 13%. Unemployment rates in Idaho, Nebraska, South Dakota and Vermont have now fallen below 5%.
Will it work to fine people who refuse to wear a mask?
Travelers in the New York City transit system are subject to $50 fines for not wearing masks. It’s one of many jurisdictions imposing financial penalties: It’s $220 in Singapore, $130 in the United Kingdom and a whopping $400 in Glendale, California. And losses loom larger than gains, behavioral scientists say. So that principle suggests that for policymakers trying to nudge people’s public behavior, it may be better to take away than to give.
How are restaurants recovering?
Nearly 100,000 restaurants are closed either permanently or for the long term — nearly 1 in 6, according to a new survey by the National Restaurant Association. Almost 4.5 million jobs still haven’t come back. Some restaurants have been able to get by on innovation, focusing on delivery, selling meal or cocktail kits, dining outside — though that option that will disappear in northern states as temperatures fall. But however you slice it, one analyst said, the United States will end the year with fewer restaurants than it began with. And it’s the larger chains that are more likely to survive.
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