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More than a thousand people wait in line for free food at Brooklyn’s Barclays Center as New Yorkers struggle with unemployment and other financial stress that led to the COVID-19 outbreak.
The U.S. economy continues to grow despite summer growth and massive federal aid in the case of the coronavirus, but millions of Americans are either left behind or in danger of being left behind.
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With the fall approaching, the broader economy has performed better than expected. Hiring has risen again in August Gust, consumer spending has remained steady, manufacturers are still on the rise and demand for homes and new cars are surprisingly strong.
See: Marketwatch Economic Calendar
Next week’s data suggests a stronger increase in retail sales in August, as well as an improvement in producers in September. The recovery of which is still ongoing indicates that even if it is cut.
Yet a new divide has been filled between haves and have-notes – with have-notes, whose livelihoods have been most disrupted by the coronavirus epidemic.
Consider a pair of industries: finance and hospitality.
The unemployment rate among banks, insurance companies, Wall Street brokerage and other money management companies was just 2.2% in August. That is not much higher than the national rate of unemployment before the epidemic in March.
Read: U.S. Consumer prices have risen steadily for the third month in a row as used car prices have risen
In contrast, the unemployment rate for companies involved in travel, hotels, meals and other types of entertainment and hospitality was a staggering 21.3% last month. Worst of all, these jobs pay far less than professional work in areas like finance and techno professional.
Many major economic reports on the economy, however, tell us very little about this split.
Retail sales and consumer spending, for example, have been stronger than expected. Probably a factor as to why they’re doing so poorly. They can afford it – and they are doing it.
This helps explain the strong sales of homes and homes in high demand among individuals. And they have more reason to spend in view of the massive boom in the stock market that has pushed their net worth closer to pre-epidemic levels.
T.S. Steve Blitz, chief economist at Lombard, said it has long been an industry that 20% of wealthy Americans account for 80% of all prudent spending. If that is the case now, they will see the recovery look better than that.
Millions of Americans still out of work who are struggling to make ends meet have no such luxury, especially after the end of an additional $ 600 in federal unemployment benefits in July.
“It’s a significant loss for people who aren’t getting it anymore,” Blitz said.
These Americans’ loss of income and the devastation caused by airlines, hotels, restaurants and retailers could eventually filter into the wider economy and hurt the high-income earners and the stock market as well.
Earlier this month, the airlines of major airlines, hotels, mall operators and others announced that they would cut more jobs permanently unless Washington provided additional support. U.S. Unemployment benefit claims have soared for four straight weeks, possibly another warning sign of another trouble.
Read: The jobless claims of the stalled signal in the labor market are rising for the fourth straight week
Also: U.S. Unemployment claims are rising again – and this state is a big reason for it
The Federal Reserve, meeting this week to assess the economy, is still concerned enough that top central bankers are requesting more economic relief from Congress.
Usually eager to advise legislators, the Fed surprisingly raises its voice as Congress worries that the recovery will salute the flag until Congress puts more wind on its back.
The state’s largest economy, California, is not helping wildlife. The fires have displaced many people and increased programs to benefit the unemployed.
Nothing has changed in Washington yet. Democrats blocked a “skinny” Republican bill last week that would have provided little more support to the economy. Democrats want a bigger spending bill that Republicans have resisted.
With the main 2020 elections set to begin in November, the odds of another major financial aid package are dwindling. Analysts say this is probably the only thing Congress will achieve to function, a sudden slowdown in recovery.
However that didn’t happen in August, and it doesn’t look like the economy will suddenly come out in September.
Douglas Port, chief economist at BMO Capital Markets, said: “As difficult as it may have been a few weeks ago, it now seems completely credible that we have gone to the polls without taking any new steps.”
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