U.S. economic rebound may be a slow train for unemployed

 https://www.reuters.com/article/usa-economy-reopen/us-economic-rebound-may-be-a-slow-train-for-the-unemployed-idUSL1N2GD2MO

The Federal Reserve has recently updated their estimates for what they think the economic recovery will look like for the United States. The news is positive and shows that the U.S. output will not be low as we initially thought. The problem with this is that some of the main job creators in the economy are going to face the biggest struggles. 

Small businesses do not have the resources of big corporate offices and are unable to withstand the same economic environment that bigger businesses can. This means that many of these businesses may end up going under in the next few months. And for the ones that don't, they will struggle to get their business back to where it once was. Small businesses make up a good portion of the job market and with their slow recovery, there will also be a slow recovery on the unemployment rate. 

The U.S. is also going to face unemployment pressures because certain industries are becoming obsolete and there is going to be a lack of jobs based on that. With more people working from home than ever, offices are not always necessary for businesses and this can force certain employees to no longer be necessary, such as janitors or security. 

It seems as if the economic struggles of the U.S. are going to impact the middle to lower class more than the upper class citizens.

China's economy shrugs off global slump as shoppers join the recovery

China's sales have increased for the first time in 2020. Even if the gain is only .5 percent over last year, it still means that China's economy is on track for recovery. This is not the only thing that is showing stabilization. In fact, China's job market is showing signs of stabilization according to the bureau of statistics. It appears that since China has been in recovery the longest, they are now a sign of hope for other modern countries. With shown recovery in areas they thought were going to be lost for a while such as movie ticket sales and car sales both growing (with car sales growing by 12 percent). Now even though  the economy appears to be stabilizing, the unemployment is still higher than it has ever been. This year China is expected to have its biggest amount of college graduates enter the workforce and a lot of these college graduates will be unemployed due to the economy still reeling from the covid pandemic. In short, while China may be a great beacon of hope for economics on their way to recovery, it still shows that even though they are recovering they still have a lot of problems to solve and it looks like they will not find the answer anytime soon.

https://www.cnn.com/2020/09/15/economy/china-economy-retail-intl-hnk/index.html

U.S Consumer Spending Decreases in August

 Over the course of last month, consumers within the United States held back on their spending. Some experts have connected this lack of spending to the government cut extended unemployment benefits for millions of consumers. Interestingly, core retail sales fell 0.1% this past month as opposed to a 0.9% increase in July. This is significant because these sales correspond closely with "consumer spending component of gross domestic product." Moreover, even though overall retail sales increased by 0.6%, this was due to higher gasoline prices supported receipts at gas stations. 

My thought is do you think this is a result of an economic insecurity as people could possibly become increasingly concerned about their job security/income as this pandemic drags on? Or could this just be a outlier month and September will align more with July?

https://www.cnbc.com/2020/09/16/us-retail-sales-august-2020.html

WTO finds Washington broke trade rules by imposing tariffs on China

 https://www.reuters.com/article/us-usa-trade-china-wto/wto-finds-washington-broke-trade-rules-by-imposing-tariffs-on-china-idUSKBN2662FG

    The punitive tariffs imposed on China by the Trump administration in 2018 violated international trade rules according to the World Trade Organization ruling this Tuesday. Washington immediately reacted by deeming the WTO "inadequate" to settle this issue. The members of the panel considered that the measures used by President Donald Trump, who denounced in particular a forced technology transfer to access the Chinese market, violates several rules of the institution. The additional taxes of 25% and 10% on the importation of certain Chinese goods exceed the maximum tariffs accepted by the United States on these products within the framework of the WTO. Also, the members of the panel believe that the arguments given by the United States to justify this 'protectionist' approach do not allow an exception to its multilateral trade agreements. Last year however, Washington and Beijing reached a first agreement to calm the situation. This new ruling has now obviously angered the administration and created a lot of tension which leads me to question whether Trump will see this as an opportunity to quit the organization given that he is already very critical of multilateral institutions.

Corona Virus Job Losses are Becoming Permanent

 https://www.foxbusiness.com/economy/more-coronavirus-job-losses-are-becoming-permanent

During the beginning of the pandemic, many employers that initially laid off employees expected to be back to full employment by the end of 2020. However, this is appearing to be more unrealistic by the day, and 67% of employers are not looking to rehire by the end of the year. While there has been positive decline in unemployment levels, there are still 11.5 millions Americans out of work compared to February. Also, that number of jobs added should be taken with a grain of salt. Many of those jobs added were seasonal, temp jobs which were created by hiring people to conduct the 2020 census survey. Once these jobs are no longer in the picture, I think there be regression in job growth once again. 

The rest of 2020 is going to be an economic roller coaster, especially leading up to the election in November. If Trump lets the economy play out, I don't think it's going to be a pretty picture. As Goldman Sachs predicts that if there are no other relief packages passed by congress, only 16% of business owners are confident that they can maintain their current payroll, which is already way less than in February. 

  https://blogs.worldbank.org/health/covid-19-coronavirus-panic-buying-and-its-impact-global-health-supply-chains

A recent article published by Emilie Besson highlights various market failures brought by the pandemic and emphasizes questions about the government’s role in addressing these problems. Although “panic buying” — the purchase and hoarding of goods in anticipation of future shortages — was a larger phenomenon in the earlier stages of the pandemic, this trend still exists. In order to ensure lower income citizens have access to food and health items that are subject to panic buying, some stores are rationing these items and adjusting store hours so needier individuals can afford and access these goods. This policy highlights debates over the government’s role in countering a classic problem with markets: income inequality. While it is not the government who has instituted these policies, it is possible that the government will step in to mandate such policies on a federal level. Although rationing these goods for poorer individuals appears noble, many may complain that it would be more efficient for the market to solve this issue on its own, without the help of the government.

Another potential market failure caused by the pandemic is the asymmetry of information (information failures) brought by false medical products. In recent months, there have been a surge in counterfeit face masks and surgical gloves. While it may not be easy for the government to address this problem, the government’s role in helping correct this market failure would likely be less controversial than policies regarding income distribution. The government needs to find a way to require every company — even online providers — to demonstrate the validity of their products. This is undoubtedly a situation where the consumer cannot afford the expense of an information failure. 

US Debt on the path to Exceed World War II

The hits keep on coming. After millions of job losses and loss of income and huge death tolls, the pandemic recession has put the United States in a position it has not seen since World War II. The size of the United States debt has grown almost as large as the USA economy and is set to be more than the economy within the next year. Federal debt, as a share of the economy, is now on track to smash America’s World War II-era record by 2023.

This level of debt was only forecasted to happen at the end of the decade. However, COVID-19 and it's associated effects have brought it much closer than economists would have imagined. 

“We should think and worry about the deficit an awful lot, and we should proceed to make it larger,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget in Washington, which has for years pushed lawmakers to take steps to reduce deficits and debt.

Tax cuts in 2017 totaling over $1.5 trillion were expected to pay for themselves but have only added to the debt stock. 

The Coronavirus pandemic has forced the economy to contract to levels not seen in 75 years. 

Now with people out of jobs and businesses failing, the president has been forced to approve more than $3 trillion in new federal spending to help businesses and individuals stay afloat.

https://www.nytimes.com/2020/09/02/business/us-federal-debt.html

U.S. Economic "Recovery"

 As many know, COVID-19 has negatively impacted many countries across the globe. In the U.S., these effects include a myriad of deaths, the complete halt of large social gatherings, and an economic recession. Some economists may argue that "we are recovering" or "beating this virus". And they may not be completely wrong given hiring increased again in August, consumer spending has been steady, manufacturers are still on an upswing and demand for homes and new cars has been surprisingly strong. Yet I have to wonder if all Americans are feeling this recovery equally. 

    The Bureau of Labor Statistics reported "The unemployment rate among banks, insurers, Wall Street brokerages and other companies involved in the handling of money was just 4.2% in August". In contrast, "the unemployment rate for companies involved in travel, hotels, dining out and other forms of leisure and hospitality stood at a stunning 21.3% last month." This is just one comparison but I fear it may be indicative of a larger problem. There seems to be a trend during recessionary periods; the government prioritizes large business while leaving its citizens to almost fend for themselves. 

    In my opinion, a one-time check of $1200 dollars is not satisfactory during a pandemic. And the recovery we have made has not been seen equally by all. This is a problem that arises with solely focusing on metrics to determine the state of our economy. It does not always account for the small nuisances and potentially lurking variables that could weigh on these numbers. Unfortunately, this discrepancy will persist until the concept of aide is seen as a bipartisan issue rather than a tool for re-election or for defeating the incumbent chair. 

https://www.marketwatch.com/story/the-numbers-tell-us-the-economy-is-better-but-millions-of-americans-arent-feeling-it-2020-09-12