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’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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