Rise in virus cases adds to economic uncertainty ahead of U.S. election
Send a link to a friend
[September 26, 2020]
By Ann Saphir
(Reuters) - With COVID-19 deaths in the
U.S. topping 200,000 this week following a rise in new daily cases last
week for the first time in eight weeks, the role of the economy in the
looming presidential election could take on heightened importance -- but
it is not clear how.
Federal Reserve Chair Jerome Powell has said repeatedly, including
several times this week alone, that the strength of the country's
economic recovery depends on keeping the novel coronavirus under control
-- critical to instilling confidence in Americans that it is safe to
resume normal activity.
Among the six battleground states, ones that are hotly contested because
their population can swing either to Republicans or Democrats, Wisconsin
looks particularly troubled less than six weeks before the Nov. 3
election determines whether Republican President Donald Trump is
re-elected or is ousted by Democratic presidential nominee Joe Biden.
Wisconsin stands out for its high and rising load of new coronavirus
cases, about two-and-a-half times the U.S. average, adjusting for
population.
With more than 1,900 new cases on average each day, Wisconsin's governor
this week declared a state of emergency.
The seven-day average of new cases is also rising sharply in Arizona,
another battleground state, but the rate on a per capita basis is below
the national average.
An incumbent president's reelection usually is closely tied to the
health of the economy. But the links between the virus, the economy and
how people will vote in the presidential election remain far from clear.
Among the six battleground states, Biden appears to be ahead in just
two, Reuters/Ipsos polls show: Michigan, where the virus has mostly
stayed under control, and Wisconsin, where it has not.
Like the link between the virus and vote, the link between the virus and
the economy is less than obvious.
The unemployment rate in Pennsylvania, at 10.3% in August, was higher
than in any other of the battleground states, even as the case load
there is low and falling. Arizona's unemployment rate, at 5.9%, was the
lowest.
[to top of second column]
|
Yard signs supporting U.S. President Donald Trump and Democratic
U.S. presidential nominee and former Vice President Joe Biden are
seen outside of an early voting site at the Fairfax County
Government Center in Fairfax, Virginia, U.S., September 18, 2020.
REUTERS/Al Drago
Nationally, COVID-19 cases surged in the summer, just when household
spending staged a comeback from the worst quarter in U.S. economic
history since at least 1947.
But, as JP Morgan chief U.S. economist Michael Feroli noted this
week, households were getting a big fiscal boost at the time. In
July they received $75 billion in extra unemployment benefits. Those
benefits expired at the end of July, leaving out-of-work households
with far less cash to spend.
July was also the month when the Paycheck Protection Program
delivered its peak support to small businesses.
Government aid is mostly tapped out and the U.S. recovery is showing
signs of slowing, though bright spots remain, with economic data
this week confirming a hot housing sector and a burst of new
business orders for equipment.
However, some 26 million Americans continue to rely on unemployment
benefits, foot traffic to U.S. restaurants and retail stores is
showing little recent improvement, and small businesses are
increasingly stressed, data showed this week. One survey showed 40%
of small businesses expect they will not earn enough revenue through
the end of the year to stay in business.
Analysts at banks including JP Morgan and Goldman Sachs this week
trimmed their forecasts for growth next quarter.
(Reporting by Ann Saphir; additional reporting by Jason Lange, Lucia
Mutikani, Lisa Shumaker, Chris Canipe, Howard Schneider and Chris
Kahn; Editing by Leslie Adler)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |