In a few days, the euphoria over the announcement of a vaccine available in early 2021 was overshadowed by the worrying and rapid increase in cases of contamination to unprecedented levels, more than 130,000 per day.
“The Covid still determines the economic trajectory. The current rise in cases is much more worrying than the one we have seen in the south this summer; it should disrupt economic activity much more”, notes Diane Swonk, economist for Grant Thornton, in a note.
“Buy a small turkey,” to celebrate Thanksgiving in a small group on November 26, instead of the usual large family meals, she advises.
The world’s largest economy, which had started to recover from the shock caused by the pandemic, could plunge again with this new expected slowdown in activity.
Chicago, the third most populous city in the country, has called on its residents to stay at home, while New York, the largest American city, has forced its bars and restaurants to close at 10 p.m.
“Economists are starting to tell us that they are considering lowering their GDP forecasts” because of the upsurge in the virus, said Maris Ogg of Tower Bridge Advisors.
The United States, which entered a recession with the crisis caused by the Covid-19, then had somehow managed to keep its head above water. Real estate is at an all-time high, the manufacturing sector is climbing.
But consumers are worried about the upsurge, and their confidence plunged in November, for the first time since July.
The virus leaves at the worst time
“The vaccine will not arrive quickly enough to feed hungry families”, summarizes Diane Swonk, because the aid granted to households in March, in the first stimulus plan of 2.200 billion dollars, expires little by little and 11 million Americans are still unemployed.
The virus leaves at the worst time.
The transition period between Presidents Donald Trump and Joe Biden leaves little hope for the rapid adoption of a new stimulus plan with financial aid measures for households, businesses and local communities.
The White House has passed the buck to Congress, where the differences between Republicans and Democrats are deep, especially on the amount of the envelope.
This could change if Democrats win two special senatorial elections in January in Georgia.
A support plan, even weak, would bring activity back to its pre-crisis levels “mid-2021. Employment would not return to its previous peak before the end of 2023”, explains Ms. Swonk.
The vice-president of the central bank (Fed), Randal Quarles, put him, for a return of the economy to its rate of the beginning of the year in 2022 or the beginning of 2023, he said Tuesday.
Households must regain confidence in order to spend. In the federal capital Washington DC, for example, only 10% of workers had returned to the office in October, according to data from the DowntownDC Business Improvement District. The city’s daytime population fell to 47,000, from 256,000 before the pandemic.
Recovery in K
Many observers warn that the economic recovery may not be a straightforward recovery – V-shaped, or slower, U-shaped – but a two-speed, K-shaped recovery, that is. – to say that only part of the population would benefit from it.
The unemployment rate fell to 6.9% in October, half that of the height of the crisis when it peaked at 14.7%.
But a third of the unemployed have now been out of work for more than six months. This worries economists, because the longer the unemployment period, the more complicated the return to work.
“These are women who left the workforce but not by choice,” children only going to school part of the week at best, lamented Jerome Powell, chairman of the Fed.
“These are workers who (…) are losing their link with the work force and the life they had,” worried the powerful central banker.