Q3 Sees Large GDP Rebound

The U.S. economy made up significant ground in Q3 in what was termed as the quarter of re-opening. Reports have shown that GDP likely grew around 7.4% which is a record setting rate for one quarter. However, it is clear this rate will not continue. COVID cases are at a new high and there is much uncertainty with the election. The market has seen massive selloffs the last few days as well, and tech earnings were disappointing. There is still much confusion in regard to the fiscal stimulus and especially the vaccine, which was promised by the election by President Trump.

Most economists believe the economy will continue to grow as we re-open, but at a much milder rate. What do you think GDP growth and economic activity will be like in Q4?

https://www.morningstar.com/news/dow-jones/202010295208/us-economy-likely-recovered-significant-ground-in-third-quarter-gdp-rebound

Economic growth will slow in Q4

 This year has been unexpected to say the least. Many Americans' lives have been jeopardized by the pandemic similar to many businesses that have likewise been jeopardized. One key thing our government did to try and cushion the blow of the pandemic was the release of the "stimulus checks". The stimulus checks, for the most part, did exactly what the name entails: it stimulated economic growth. However, JPMorgan Asset Management’s David Kelly calls this growth a "steroid kind of recovery" basically meaning that the economic growth will slow during quarter four of 2020. After a recession, economies can see sharp V-Shaped recovery whereas the United States has seen an "interrupted V-Shape recovery" or "half of V" (Kelly, 2020). Basically, the stimulus was a "shot in the arm" for the United States by temporarily fixing the problem. Economic growth is now slowing down due to the absence of a second stimulus. Kelly, in response, believes there will be a second stimulus package after the November elections to bolster economic growth. 

Weizent. “Economic Recovery Could Slow in Q4 after 'Steroid of Fiscal Stimulus' Fades, JPMorgan Asset Management Says.” CNBC, CNBC, 22 Oct. 2020, www.cnbc.com/2020/10/22/jpmorgan-asset-management-on-economic-recovery-us-stimulus-talks.html. 

Airlines will struggle long after it is safe to fly again

     The airline industry has been one of the hardest hit during the COVID-19 pandemic. United States airlines collectively lost $12 billion in the second quarter alone. The 5 largest airlines have already reported losses of $8.9 billion for the third quarter. History is not on the airlines side when it comes to recovering from the pandemic. After the Great Recession ended in 2009, it took five years for passenger traffic to recover. Even after the small recession in 2000 it took four years for passenger traffic to hit pre-recession levels. Historically, it takes even longer for business travel to recover which is one of the most depended on sectors for airlines. With millions of people losing their jobs, people are less likely to take any vacations. For struggling businesses, air travel will be the last thing on their mind until they can recover their losses. It is unknown how long it will take for air traffic to recover.  Airlines are also worried about a permanent impact on travel. With so many business successfully using video calls for conferences, there is the possibility that some travel will be unnecessary in the future. The CEO of Delta believes that this drop could be up to 20% for the next few years. With no set time of the pandemic ending, airlines worry that every day will continue to hurt them more and more.

when do you think the airline industry will recover?

https://www.cnn.com/2020/10/27/economy/airlines-pandemic-recession-impact/index.html

Unemployment Claims Are Down, but Many Workers Lower Expectations

 Weekly unemployment claims are decreasing, but there is still a long way to go to reach economic recovery. There are still 757,000 unemployment claims as well as 345,000 claims for the federal jobless program; created to provide aid to certain groups of people during the pandemic. With no increase in current federal aid to those hit hard by the pandemic, there may be a decrease in consumer confidence. Many people have been out of work for 7+ months which exceeds the 6 month limitation on unemployed insurance programs. Thankfully, there are still some programs in place by the government to provide excess aid due to the continuing pandemic. While numbers of unemployment claims are decreasing, it may not be due to so many returning to jobs but that people are no longer fitting the criteria and moving into a longer term unemployment status. The current job finding rate is low and continuing to decrease, causing further permanent unemployment problems. The continuation of worsening opportunities is becoming very discouraging to those looking for work. With the presidential election looming, many are taking the experiences of the last few months into account and seem to be favoring Joe Biden. This could, however, be related to the fact that most of the people who lost their jobs are considered to be minorities and were already favoring Biden. Many factors are currently at work that will affect the election and, in turn, the future economy. 

https://www.nytimes.com/2020/10/22/business/economy/unemployment-claims.html

Senate Confirms New Supreme Court Justice

The Senate officially confirmed Amy Coney Barrett’s appointment to the Supreme Court on Monday, October 26. Barrett is to take the seat of the late Justice Ruth Bader Ginsburg. Her confirmation makes her the Supreme Court’s youngest justice, at age 48, and the first justice to be a mother of school-aged children. Barrett is conservative, solidifying a 6-3 conservative majority on the high court, and given her age, is likely to affect the skew for decades to come. 

One of the first cases Barrett will consider as a Supreme Court Justice is the examination of whether the Affordable Cares Act should be overturned. Part of this examination is whether a change to the individual mandate, the tax Americans had to pay for not getting health insurance, would affect the validity of the entire law. Other upcoming cases she will be apart of will include abortion rights (undo Roe v. Wade), expansion of the interpretation of the Second Amendment, and the upcoming election outcome, if a case arises, pending she does not rescue herself from any of these cases. 

The vote was a narrow 52-48 vote, with all but one Republican senator, Susan Collins (R-ME), voting in favor of her confirmation. No Democrats voted in favor of Barrett’s appointment. Collins stated her reasoning for opposing Barrett’s appointment was due to disagreement with the process used for her nomination (as did Democrats, among other reasons). In 2016, Senate Republicans withheld consideration of a supreme court nominee until after the general election, insisting that the American people, through their votes, should have a voice in the decision-making process. For Barrett, however, the Republicans, with less than two months to go until the election, expedited Barrett’s confirmation. 

What impact do you think her appointment will have on the economy, perhaps specifically related to the ACA or other upcoming cases? What impact do you think Barrett’s appointment will have on the upcoming election? 

https://www.vox.com/2020/10/26/21529619/amy-coney-barrett-confirmed-supreme-court

COVID Taking The Work Force Back To The 1960s

Even though some new reports have said that the unemployment rate is going down, it has recently been stated that women are starting to leave the work force at a shocking rate due to COIVD. Between August and September 865,000 women dropped out of the work force whereas only 216,000 men dropped from the work force- that's almost four times the rate as men. COVID has forced many people to stay home including children who are either attending school virtually or are not attending school at all due to some schools not reopening. Even thought men maybe staying home in order to help out around the house, many women feel pressured to choose between taking care of their family or going (back) to work. Therefore, many of them end up leaving the work force. Some people may be thinking that women leaving the work force is fine and that it won't harshly affect the economy; however, women make up almost 50% of the work force. How do you think this will affect the economy overall?

https://www.npr.org/sections/coronavirus-live-updates/2020/10/02/919517914/enough-already-multiple-demands-causing-women-to-abandon-workforce

"What would delayed election results mean for the economy?

 https://www.marketplace.org/2020/10/22/what-would-delayed-election-results-mean-for-the-economy/

Everyone is anxious about the election. Economists are especially nervous with the amount of uncertainty currently in the US with  the pandemic worsening, small businesses closing, families losing income, and firms wary of investing in capital and labor.  The uncertainty of such a messy election year has caused some people to believe that we might not know the results of the election until the following day.  With the country in such a vulnerable place, action needs to be taken quickly to help the American people and our economy.

Currently, the Trump administration is fighting another stimulus package. However, our people may need it now.  It is presumed that the current administration is holding off until the results of the election are released.  Depending on the outcome of the election, we may not see a stimulus package until Januray or February. If or when we get another stimulus package, will we be too far gone and will it help those who need it most? Do you think our economy can withstand the strife and uncertainty for much longer? 

So Much for Free Trade, Budget Deficits

 Article: "Trump's Biggest Economic Legacy Isn't About the Numbers," The New York Times, October 24, 2020

The above article indicates that voters continue to rate the economy as the best aspect of Trump's presidency. Before the pandemic, the United States had record low unemployment, increasing incomes, and rising investment. But, the author of the article argues, this will not be Trump's legacy, no matter whether he wins or loses the election. 

Trump's main economic legacy will the tonal shift he caused in economic discussion within both parties. Previously, both Democrats and Republicans emphasized the positive effects of trade deals, largely ignoring the complaints from their rank and file supporters that globalization meant fewer American manufacturing jobs. Now, after nearly four years of Trump, both major parties have begun to backtrack on globalization. Even Joe Biden, who is not nearly as keen on striking "deals" to benefit American workers, has a plan to keep manufacturing at home. 

Further, Trump has ended much of the hesitancy within the Republican party about deficit spending. Of course, Republicans had long in fact been in favor of deficit spending (so long as it was on grossly disproportionate "defense" spending), but Trump has emboldened Republicans to admit that deficits do not matter in the short term. 

I find the former shift to be rather short-sighted. Both parties need to concentrate on helping workers adapt to the disruption that will come with increased automation, decentralized work, and businesses that will look remarkably different from those of the 20th century. We should not stifle long term growth in an attempt to realize a completely romanticized version of the past. 

As for the latter, this is a welcome realization. So long as the parties are not too exuberant in their spending, spend on the right things, and recognize the long term consequences of deficit spending (which, of course, is asking for more than a lot), the deficit should not be much to worry about. 

What do you think? Is the backlash against free trade justified? What about the new attitude toward deficits? 

Unemployment Claims Are Down, but Many Workers Lower Expectations

 https://www.nytimes.com/2020/10/22/business/economy/unemployment-claims.html

Those temporary layoffs are lasting a lot longer than expected due to Covid, and there doesn't seem to be an end in sight due to the new wave. The number of people applying for unemployment has fallen, but still at an alarming level. Senate Republicans are fighting against yet another stimulus. People are now changing expectations now that these changes seem to be permanent. We are starting to see people leave the labor market altogether. Only 53% of those laid off due to the Coronavirus have returned to work. This number is too low. Only 39% thought they would go back to their jobs, however. How do you think the decrease in the people in the labor force will affect the upcoming election? 

The Greater Recession coming on its way

Federal benefits being suspended would create a lot of damage almost as terriying as the economic effects of the coronavirus. We all know that when the Trump administration declares something, almost the opposite will happen. Like in February when Trump declared that the number of cases would soon go close to zero, we saw a huge pandemic that arose. When Vice President Mike Pence insisted in mid-June that there would not be a second wave of the coronavirus, many new cases and deaths arose. When Larry Kudlow, the administration's chief economist declared that the downfall of the economy that the US faced, would be recovered with a "V-Shaped Recovery", we all saw what happened next. Federal benefits such as stimulus checks across the country to the unemployed was greatly beneficial to those people as well as the consumer spending in the country. However, due to these checks, the government expenditure rose about $300 billion which means that the government had to print more money which in turn caused inflation. Two-thirds of business economists in the US expect a recession to begin by the end of 2020. We all have seen and know where the economy of the US is going towards which is downwards. So, what do you guys think would be a better solution by the federal government in order to avoid the recession and cause the US economy to regain its flow? Citation: Krugman, P. (2020, August 6). Coming Next: The Greater Recession. Https://Www.Nytimes.Com/#publisher. https://www.nytimes.com/2020/08/06/opinion/coronavirus-us-recession.html