The presidential election is over. What does that mean for the economy?
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The uncertainty surrounding this year’s presidential election had some investors and watchers worried about what contested results could mean for the economy. In late October, “Marketplace” host Kai Ryssdal spoke with Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution, about how the election might affect the economy.
Now that a winner has been declared, Ryssdal spoke with Edelberg again about what might come next for this economy. The following is an edited transcript of their conversation.
Kai Ryssdal: Well, here we are in the future of which we spoke three and a half weeks ago. We have a winner in the presidential election, although the president and his party are refusing to admit that. I wonder, as you read the economic tea leaves now, how you’re feeling.
Wendy Edelberg: I’m certainly feeling better in that it looks like some of the worst outcomes that folks feared are off the table with regards to the immense uncertainty that we might be experiencing post-election. And some of the economic news that we’ve gotten, since we last spoke has been more positive. So that makes me feel better. But there’s, of course, still a lot of economic pain out there. And I still very much want policymakers to act with urgency to do more to support this economy.
Ryssdal: It will not come as news to you that politicians in Washington are not exhibiting that urgency. And in fact, to the degree that they’re talking about more relief for this economy, they are talking — at least Sen. Mitch McConnell is, who will in theory have the deciding vote in the Senate — he’s talking on the smaller end, rather than the larger.
Edelberg: What’s frustrating about these discussions about how large a package should be is that policymakers have it completely within their power to have the size of the package be hinged on the state of the economy. So they can set expansions and extensions of unemployment insurance benefits, for example, hinge on the state of the labor market, and have them draw down automatically as the labor market improves. So if both sides are in disagreement as to how strong the labor market is, that doesn’t mean that they can’t agree on a package, if they just make the package contingent on the labor market.
Ryssdal: What do you suppose this economy looks like if, and I’m sorry, to go back to the size thing again, but for as much as I value your expertise, I don’t see them actually doing the thing that you just talked about — about, you know, making it contingent upon the health of the economy. What happens in this economy, if a relief package is on the smaller size?
Edelberg: If it’s on the smaller side, and then they’re incredibly nimble, to be able to come back later and do something again if more is needed, then that isn’t the worst of all possible outcomes. But that’s probably not the world you anticipate either. If it’s too small, no, we’re in big trouble. We have 10 and a half million people who don’t have jobs who used to have jobs. That’s insanity. We have lost sight of what economic pain looks like. And with each passing week, the permanent scarring effects of this economic pain is going to get worse.
Ryssdal: Just to circle back to the thing you started with, which is that, you know, uncertainty is generally speaking down given the results of the election. Do you think the economy, and I understand that I’m anthropomorphizing here, but do you think the economy is doing what President-elect Biden is doing with what President Trump and Republicans are doing, which is in essence saying, nothing to see here, move along, everything’s gonna work out? Right, the economy’s just kind of cranking on.
Edelberg: I think that puts too much emphasis on the fact that there are really bad events that we worried about that look like they’re off the table. And yes, that should all make us breathe a sigh of relief. But when 10 and a half million people are without jobs and small business revenue is down 25%, that’s like hair-on-fire, screaming-down-the-street panic-inducing. Which I would argue — I do argue — is the opposite of nothing to see here.
COVID-19 Economy FAQs
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
How long will it be until the economy is back to normal?
It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.
How are those COVID relief payments affecting consumers?
Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.
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