According to a survey recently conducted by the US Federal Reserve (FED), the economy in four out of 12 regions of the US seems to be “at a standstill” or registering modest growth, while the economy in four other regions began to fall sharply last month. The economy in four other regions started to decline deeply in November. In its biannual report, the FED said that even in regions that recorded growth, economic activity was still at a lower level compared to the pre-pandemic period.
In the context of the US continuously setting new records regarding the number of new infections and deaths each day in recent weeks, the labour market has also witnessed negative signals. A newly released report by the ADP Research Institute shows that US private-sector job growth in November fell to its lowest level since July, with employers adding only 307,000 new jobs. A senior ADP leader stated that although November saw an increase in the number of new jobs, the pace of job growth continued to slow down. The figure of 307,000 new jobs last month was only equal to 40% of the number recorded in September, proving too few to help the US recover the 19.7 million jobs lost in March and April.
Commenting on the “gloomy picture” of the world’s largest economy, the FED said that the US is undergoing its largest wave of COVID-19 with the number of new infections per day skyrocketing, even at a higher level than the worst days recorded in last spring, forcing local governments to re-impose restriction measures and pushing the economy into more difficulty. Meanwhile, a growing number of economists are concerned that the danger of the health system breaking down before the pandemic ends could push the US economy into a “dual crisis” in 2021.
Given the “dark cloud” overshadowing the economy, US politicians are stepping up with solutions to save the economy from slumping further. Speaking before the US House of Representatives Committee on Financial Services recently, Chair of the FED Jerome Powell warned that many small-sized businesses will not survive through this winter without receiving assistance. He stressed the need to strengthen government aid packages to sustain recovery and help companies and households overcome the current pandemic period. Meanwhile, in his speech preparing for the Senate Budget Committee hearing, US Treasury Secretary Steven Mnuchin praised the achievements of the Coronavirus Aid, Relief, and Economic Security (CARES) Act worth US$2.2 trillion in supporting the acceleration of employment and reducing the unemployment rate to 6.9%. However, he admitted that the mission will remain unfinished until all Americans are brought back to work. He called on the US Congress to soon adopt a new stimulus package to revive the economy.
Previously, a group of 10 bipartisan parliamentarians of the US Senate and House of Representatives also proposed a US$908 billion COVID-19 bailout package. Analysts said that the aforementioned proposal aims to break a month-long deadlock between the Democrats and Republicans concerning a new emergency assistance package for small-sized businesses, unemployed workers, the airline industry and many other industries struggling amid the pandemic. In addition to proposing a new bailout package, Senator Susan Collins of the Republican Party emphasised the urgency of the stimulus package to energise the economy in the context of new infections on the rise across the country.
The aforementioned fact shows that the US economy is facing unprecedented difficulties. However, focusing on stimulus packages alone is still not enough to save the world’s no. 1 economy. To restore growth, the US must first control the pandemic. In his recent speech preparing for the Congress hearing, FED Chairman Jerome Powell also shared the same view by emphasising that “full economic recovery is unlikely until people are confident enough to resume normal activity”.