Opinion | US economic outlook until November: cloudy with a chance of escalating trade wars
- Positive sentiment in the US stock market fails to account for continuing unrest in the run-up to the presidential election, a second wave of Covid-19 infections and tensions with the European Union and China
Despite the recent return of stock market volatility and diminishing hopes that easing lockdowns would lead to a quick recovery, the US market has generally remained disconnected from post-pandemic political realities. Initial positive sentiment has been reinforced by several factors, including the unexpected drop in unemployment and the creation of 2.5 million jobs in May.
Furthermore, according to the New York Federal Reserve, companies’ outlook is at a decade high and manufacturing in New York State stabilised in June. Other reports also point to an apparent stabilisation in US economic activity.
However, pressure has been mounting in the White House and among congressional Republicans to wind down current unemployment benefits by the end of July as they are seen as a “disincentive” for work, even as Democrats call for their extension until early 2021.
A compromise is likely that will provide the necessary flexibility to ensure a basic safety net as the full extent of the pandemic’s damage becomes apparent in the coming weeks.
