Even with more stimulus, analysts forecast a slow economic recovery
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Washington’s compromise bipartisan relief bill is still in the congressional sausage maker, it would seem.
We’re hearing: more help for small business, and also big business, another round of stimulus checks (smaller than the ones in the spring), a 10-week extension of federal pandemic jobless benefits that are now set to expire right after Christmas, plus $300 a week added to everyone’s unemployment check.
Meanwhile, jobless claims are heading in the wrong direction. This morning’s report showed another 1.4 million people laid off and signing up for benefits. And other signs of economic slowdown keep coming.
So, even with the stipulation that we’ll probably get just under a trillion in relief before the end of the year, there’s still a real and increasing risk that the recovery from this pandemic recession will be slow and long and painful for many.
COVID-19 is surging, layoffs are rising, consumers are hunkering down. Not a great place to be heading into 2021.
Mark Zandi, chief economist at Moody’s Analytics, said the $900 billion Congress is considering spending to get the economy moving in the right direction is only a down payment on recovery.
“This relief package is about avoiding going deeper into the economic hole,” Zandi said. “You know, without it, I do think we will go back into recession. So this is about avoiding that. It’s not really about jumpstarting the economy.”
And without more stimulus spending — especially to shore up state and local government budgets — Heidi Shierholz at the Economic Policy Institute said the economy is backsliding.
“We’ve already seen more than a million jobs lost in state and local government,” Shierholz said. “When you have teachers and firefighters who lose their jobs so they no longer have income, they aren’t spending money in the private sector, and so more people lose their jobs.”
Zandi’s hope is, by the middle of next year as vaccination spreads and the consumer economy starts to reopen on a post-pandemic footing, that Congress will pass a much bigger, more robust stimulus bill.
“Infrastructure spending would generate lots of jobs for all the folks who have lost their jobs permanently and … get the economy back to full employment more quickly,” Zandi said.
If that doesn’t happen — well, we’ve seen this movie before.
Shierholz says after the Great Recession, Congress pulled back on stimulus spending too much, too early.
“What they’re doing now is way better than nothing,” she said. “But it’s not enough and I do worry … we’re setting this up to be another long, slow recovery.”
That recovery to full employment took seven to eight years.
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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