Bidenomics

 Article: "Bidenomics: The Good, the Bad, and the Unknown," The Economist, October 3rd, 2020

Depending on whether or not you sit on the edges of political spectrum, you may be inclined to see Joe Biden as a radical socialist bent on upending American capitalism or as a candidate that is, unfortunately, not a radical socialist bent on upending American capitalism. Leave it to the British, particularly The Economist, to give us a glimpse of the true candidate: dull, prosaic, and moderate. 

The article indicates that Biden is certainly no radical. His first step will likely be pass a major stimulus bill. Further, if Biden were elected, he will provide economic stability simply by relieving the White House of its Trumpian chaos, incompetence, and disregard for institutions.

What is more interesting is the areas in which The Economist suggests Biden could be more bold. For instance, the article predicts a Biden presidency would see little of the "creative destruction" needed for long-run improvement in the standard of living. Biden is too keen on protecting incumbent firms, and would thus also oppose ending tech monopolies. These tendencies, coupled with complex regulations, would likely protect existing (and even poor-performing) firms, decreasing the dynamism of the American economy in the long run. 

With regard to climate change, the one area in which, in my opinion, we cannot afford to be insufficiently bold, Biden lags behind in supporting even non-controversial policy measures, such as carbon pricing. Last month, the article points out, the Business Roundtable said it supported such a policy. Then again, we all know that the Business Roundtable is a radical eco-Marxist collective unworthy of consideration by a serious presidential candidate. 

What do you think? Have Biden's economic plans gone too far? Not far enough? What should he do if he wins in November? 

Stimulus Negotiations Continue

Days after halting negotiations on a stimulus package, the sparked criticism has led to the White House taking a more aggressive push at passing a government rescue package before the election. On Friday, Trump made a $1.8 trillion stimulus offer to the Democrats, the largest one yet in negotiations with Speaker Nancy Pelosi. Trump has favored a broad economic aid package, with measures to provide more government support to businesses and individuals. Some of the provisions in the plan include:

• $1,200 direct payments to adults plus $1,000 for each dependent child

• $400 weekly federal unemployment benefits (end-date unclear)

• $300 billion in aid to state and local governments

• $75 billion for coronavirus testing and tracing 

The responses from the new proposal were not promising on reaching an agreement anytime soon. Despite the new offer being the biggest yet, Pelosi rebuffed it insisting that it did not provide a fuller strategy for COVID-19 testing and tracing. She further called the plan “insufficient” and that it amounted to “one step forward, two steps back.” The Democrats continue to push for more details and funding from the administration. Furthermore, Trump’s offer is also faced with the disposition of many Republicans, as many GOP senators are citing concern over the growing federal debt. 

If the government does not provide further relief, nearly a dozen major companies are planning to move ahead with at least 75,000 layoffs. Meanwhile, the U.S. still has not recovered half the jobs it lost in March and April. 

Do you think that an agreement for a stimulus package will be made before the election? What are your thoughts on the new stimulus package proposed from Trump, should it be higher? Lower? 

https://www.businessinsider.com/trump-administration-stimulus-plan-direct-payments-unemployment-benefits-2020-10

Repealing the ACA Would Put Millions at Risk While Giving Big Tax Cuts to the Very Wealthy

 https://www.americanprogress.org/issues/economy/news/2020/09/29/490881/repealing-aca-put-millions-risk-giving-big-tax-cuts-wealthy/?gclid=Cj0KCQjw8fr7BRDSARIsAK0Qqr5YX2VpqjFWhK-LNOGrk1-dhaCBY650hA3oHAdYQAw7gCbnTSgkAYMaAno5EALw_wcB#Ca=3%23Or=1%23Pr=7%23IA=R

The Affordable Care Act helps millions of Americans in getting affordable health insurance and was created during the Obama administration. This is done by subsidizing insurance companies, raising the standards for what they must provide, and reducing costs for low-income families. It also excludes overcharging for those with preexisting conditions. It also prevents those receiving aid to keep their coverage if their income rises unexpectedly. More people, thus, are insured under this act. Trump has been open about repealing the ACA which could put more families at risk and unable to afford basic healthcare, which could be problematic during the COVID pandemic. This could also cause the loss of middle-class jobs and services families need.

What do you think are some other effects of repealing the ACA?

"Why Did Hundreds of Thousands of Women Drop Out of the Workforce?"

 https://www.nytimes.com/2020/10/03/us/jobs-women-dropping-out-workforce-wage-gap-gender.html

Women have been increasingly entering the workforce for the past century. However, wages, among other things, have not always been equal.  Women often earn less than their male cohorts. In times of struggle, it is common for lower-income earners in the household to quit their job and return home to handle children, sick relatives, or anything else. Therefore, this is typically the woman in a heterosexual household.

With the current pandemic, schools and daycares are still closed or are not open to their full capacity.  Families are forced to find ways to care for their children and help their children navigate online learning. Given that women are typically the lower-income earners, they are returning to homes to become stay-at-home moms or homemakers.

The United States' unemployment rate is decreasing back toward its natural rate, however this is not happening proportionally.  The unemployment rate is dropping for many reasons, a big one being the massive drop in the labor-force participation rate.  Wholelistically, the dropping unemployment rate is misleading.  Women comprised more than half of the 1.1 million people who left the work force. Women are also less likely to reenter the work force, whether it be at all or at a slower rate than men.

The pandemic has disproportionately impacted women and mothers and will most likely continue to do so.

Why Trump's Positive Test Doesn't Drastically Affect the Market

 When President Trump announced his and his wife's positive test results for the Coronavirus, the stock market did take a hit. The Dow Jones Industrial Average and the S&P 500 both decreased by 0.7% while the Nasdaq Composite fell by 1.0%. However, the effect of this event isn't hitting as hard as some may think. In April, the end of the Coronavirus Crash, these same indexes fell between 25% and 29.1% since the start of the crash in February. So why didn't President Trump's announcement affect the market more than it did? To say the least, 2020 has been a very volatile year for the market. With the upcoming election next month, markets were already expected to change. That being said, President Trump did add some uncertainty to the market; however, he added it to a market that was already filled with uncertainty. Therefore, the market didn't fluctuate as much as some would expect. 

https://www.marketwatch.com/story/these-us-stocks-fell-the-most-april-1-after-trump-turned-grim-on-coronavirus-forecast-2020-04-01

https://www.barrons.com/articles/president-donald-trump-has-covid-why-the-stock-market-is-dropping-51601638339

Recent Long-Term Unemployment and its Rising Risk to the Economy

    

  Many people's jobs have been effected by the COVID-19 virus. People around the world have been laid off or put on paid/unpaid leave. For the September term, there has been a jump in workers claiming to be permanently laid off or unemployed. Millions of workers across the globe have gotten their jobs back and for those who didn't there may be trouble. Those who didn't may endure some of the unfortunate situations that were endured during the 2007-2009 recession like prolonged unemployment and major income loss. According to the Wall Street Journal, "In April, the most severe month for job loss in the current downturn, 88% of those who recently lost jobs reported their layoff as temporary, meaning they expected to return to the same role within six months, according to the Labor Department. In September, the share of such optimists fell to 51%, Friday’s jobs report showed." In April, 2 million workers classified themselves as permanent job losers, that has rose to 3.8 million workers in September.

1) https://www.wsj.com/articles/long-term-unemployment-poses-rising-risk-to-the-economy-11601652449

Airlines Furlough Tens of Thousands as Government Assistance Runs Out

     United Airlines and American Airlines furloughed more than 32,000 employees late last week when federal government support under the CARES Act expired.  Airline employees and the traveling public followed last minute negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi but no agreement was reached by the October 1 deadline.  Not everyone supported another bail out for the airlines, arguing that the industry needs to restructure but it is important to retain a well trained, skilled workforce to support business and leisure travel needs as the overall market starts to rebound.  According to an article on CNBC.com even if a deal is reached and the 32,000 workers are recalled, thousands more airline jobs have been lost through downsizing and restructuring.  "The tally of furloughs this week doesn't reflect the extent of the job loss hitting the airline industry.  Tens of thousands of other employees accepted buyouts and temporary leaves of absence that airline executives urged as they scrambled to cut costs."

https://www.cnbc.com/2020/10/02/pelosi-vows-more-support-for-airlines-asks-carriers-to-hold-off-on-furloughs.html 

 

https://cnb.cx/2ShqgaG

https://cnb.cx/2ShqgaG 

Trump’s Coronavirus Is Another Jolt of Uncertainty for Investors

 In the midst of a global recession and the United States presidential election, we see another unfortunate development with the president of the United States, Donal Trump, testing positive for the Corona Virus. It shouldn't come as a shock that this will have an impact on the recovering economy of the country during the pandemic. Not only will this effect the economy, but also the upcoming election which is crucial for the country. The presidents illness adds to the already existing concerns of investment, and this has been reflected in the performance in the stock market. Since the announcement of Trump's illness, the stock markets have fallen, with investors starting to incorporate political risk into their outlook. Stock futures fell more than 1 percent in overnight trading after Mr. Trump’s Twitter post, and shares were down about 1.4 percent at the start of trading in New York. In terms of the race for the presidency, J.P. Morgan analysts wrote on Friday that the president’s illness slightly increased Mr. Biden’s chances of winning. What do you think will happen to the economy while the president copes with his illness? How do you think this illness will impact the presidential elections?

Phillips, Matt, and Eshe Nelson. “Stocks Fall After Trump Tests Positive for Covid-19.” The New York Times, The New York Times, 2 Oct. 2020, www.nytimes.com/2020/10/02/business/trump-covid-stock-market.html. 

Lengthy era of rock-bottom interest rates leaving its mark on U.S. economy

    Low interest rates are hurting some groups and helping others. One example of this is the California Public Employees' Retirement System (CalPERS). They must earn an annual return of at least 7 percent, but cannot when the safe investments that pension funds usually rely on are paying less than 1 percent. In order to get a higher return, they must take on more risk. On the other hand, consumers have benefited from the low rates on auto loans and mortgages. 

    Due to Covid-19, the aging population, and slow growth, the Federal Reserve has decided to continue the low interest rates and large-scale buying of corporate and government securities. Since 2017, the economy has only grown by 2.5%. As long as interest rates remain low, this trend will persist. Additionally, low interest rates leave the Fed with few tools to fight recessions.

Do you think the economy will end up reaching a depression? If so, what type of monetary and fiscal policies be put in place to recover, given the already low interest rates?

Link to article: https://www.washingtonpost.com/business/2020/10/03/low-interest-rates/

Covid-19 vaccine and what it will do to the market

 The Corona virus was the core reason the stock market plummeted in mid March of 2020. Americans and many from all around the world wondered when it would go away and how deadly it really was. It is now October 4th and there is still uncertainty but a vaccine is said to be useable by early 2021. With this news, market analysts are predicting the market to grow by up to 25% over the next few months. Historically, election years are when the market does best so this combined with the arrival for a Covid vaccine will in my opinion boost the market more than anticipated. Some people believe that Covid isin't going away anytime soon but I disagree. I would go even further and say that even if Covid doesn't go anywhere, we as a society will learn to live amongst it. There have been many pandemics in the past and we have shifted back to normalcy from all of them. Do you believe the market will continue to grow? Do you think it will crash again? Why?

https://markets.businessinsider.com/news/stocks/stock-market-covid19-vaccine-rotation-sectors-buy-goldman-sachs-invest-2020-10-1029644992#