Which countries’ economies are doing best? Those that beat the virus.
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This week, on Tuesday and Wednesday, the Federal Reserve’s Open Market Committee meets for the last time this year, and the last time during Donald Trump’s presidency.
It’s tough to try to set interest rates, stimulate growth and protect the fragile recovery in the middle of a pandemic surge — with no relief bill in sight.
The thing is, the U.S. is not alone: Recovery’s going to be tough in a lot of places, even as COVID-19 vaccines start to roll out.
In addition to the Fed, this week central banks in the U.K., China, Japan and a host of other countries are also meeting. In some of those economies, the recovery is going better than it is here.
A global economy is usually a multifaceted thing. But in the pandemic, a single unifying principle applies, said Cornell economist Eswar Prasad.
“Countries that have done a better job at managing the virus do seem to be doing better in terms of economic recoveries,” Prasad said.
The evidence: much of Asia. China, for example, says it’s largely banished the coronavirus.
“China’s recovery seems to be well-entrenched, and it’s now in the position of being by far the leading contributor to what little global growth there is likely to be this year,” Prasad said.
Contrast that with India and Russia, where there’s more COVID and less recovery.
That’s a lot like the U.S., said Adam Posen at the Peterson Institute for International Economics.
“The drag on the U.S. economy is really provoked by the disease,” Posen said. And the lack of new relief spending.
In Europe, overall, fiscal and public health policies have been more effective. The cloud on the horizon, said Columbia Law professor Anu Bradford, is that the U.K. might crash out of the European Union without a deal by year’s end.
“The economic consequences of a ‘no deal’ are devastating,” Bradford said. “They are very bad for the EU, but even more so for the U.K.”
The U.S. has historically been a net contributor to global recovery after economic crises. But Posen at the Peterson Institute said mostly what the U.S. is contributing this time around is instability.
COVID-19 Economy FAQs
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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