Sadly it seems that the relief has started to slow. With most of the unemployment benefits and extended benefits cut and with the $600 unemployment subsidy being replaced by a $300 subsidy (which is not available in most states) consumer’s income has been estimated to have dropped by 70 billion in August alone. With this significant drop in income, consumption has slowed heavily in the United States. Job growth slowed and many new applications for unemployment benefits remained in the giant pile. While all this happened, manufacturing has also begun showing signs of slowing down with output slowing last month. It seems all facets that go into GDP are slowing down while our debt is still rising. With millions of unemployed workers still getting benefit, this drop in consumption could just be the start. This makes you wonder if we are in our optimal output while we are still within the covid pandemic. With economists using most if not all polices to try and compat the chaos made by the economy We are now fully seeing the extent that covid has crippled the economy. In your opinion, do you think there are any other policies or actions the government could make to help us stay on track to recovery?
I personally think there is only so much that the country can do to help protect the economy until it becomes too much. If a recession is bound to happen, the question is is it worth it to spend more money to stimulate the economy if it won't help in the long run.
ReplyDeleteI agree with Libby that there is only so much that the government can do and it might not be worth more spending. The government is trying their best to improve the economy through the stimulus checks and the extra unemployment benefits. Yes, these help stimulate the economy but I feel that as long as this virus is around the economy won't fully recover. We need to find a vaccine to stop the chaos. When a vaccine is found, consumer confidence will increase again because there is less uncertainty. Once people start spending more, businesses will be bringing in more revenue, so they will be able to hire more workers again.
ReplyDeleteI agree with both of the above posts. There is only so much the government and federal reserve can do to influence consumer spending. When consumer confidence is low like it currently is, it is very difficult to motivate consumers to spend. These policies will not work immediately and critics of the policy need to be patient of the long term view of these economic policies.
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