Rising Covid-19 cases jeopardise US growth

FE Team | Published: November 15, 2020 22:48:48

WASHINGTON, Nov 15 (AFP): Covid-19 has come roaring back and is likely to inflict further damage on the American economy, which will take years to recover to its robust pre-pandemic status.
And even with promising news on a successful vaccine candidate, that is unlikely to be widely distributed for many months.
US coronavirus infections have hit new record levels of more than 150,000 a day, causing authorities in many areas to impose new restrictions.
"COVID still determines the course of the economy," economist Diane Swonk of Grant Thornton, said in an analysis.
"The current surge in cases is much more worrisome… (and) it is expected to be more disruptive to economic activity," she said.
Authorities say an increasing number of cases have been traced back to relatively small private gatherings.
"Buy a small turkey," Swonk urged for the coming Thanksgiving holiday, when Americans traditionally gather with extended family.
"Delay celebrations and demand our elected officials do more for those suffering through no fault of their own. Masks are disposable; people are not."
Chicago, the nation's third most populous city, has called on its residents to stay at home, while in New York and Minnesota, establishments selling alcohol must close at 10:00 pm.
The world's largest economy over the summer showed promising signs of recovering from the worst recession since the Great Depression, but now risks another reversal especially in the absence of a new stimulus package from Congress.
"We are starting to hear from economists that they are thinking about lowering their GDP projections because of Covid," said Maris Ogg of Tower Bridge Advisors.
While booming home and auto sales have been a bright spot in the economy, along with a rebound in manufacturing, consumers are worried about the upsurge in cases. One measure of consumer sentiment plunged in November for the first time since July.
The new wave of infections comes in the midst of a combative political transition: Joe Biden won the November 3 election, blocking President Donald Trump's bid for a second term, though Trump continues to dispute the results. Democrats retained their majority in the House of Representatives, but whether the party can wrest control of the Senate from Republicans will not be known until early January.
That uncertainty has scuppered hopes for rapid approval of a massive new aid package to support suffering families and businesses, as well as budget-constrained state and local governments.
Congress in March approved multiple spending bills to respond to the pandemic, which were credited with boosting the economy, but many of the provisions of the $2.2 trillion CARES Act have expired.