The pandemic is likely to weaken the economy further in winter and possibly spring. However, many economists and policy makers at the Federal Reserve believe that a broad recovery should occur in the second half of the year once coronavirus vaccines become more prevalent. Biden’s future administration is also expected, along with a now fully democratically controlled House and Senate, to drive rescue aid and spending measures that could accelerate growth.
Currently, millions of consumers have avoided eating out, shopping and traveling due to the resurgence of virus cases and the cold weather. Newly imposed business restrictions have closed numerous restaurants, bars, and other venues.
TD Securities economists estimate that more than half of the states have restricted gatherings to 10 people or fewer, up from about a quarter in September. In New York City and California, among others, restaurants were set strict new limits last month.
Retailers have been particularly hard hit by the slump in consumer spending in recent months. Debit and credit card data collected by JPMorgan Chase, based on 30 million accounts, shows Americans slowed down their shopping during the holiday shopping season. This spending was 6% lower in December than a year ago. That was worse than in October when card spending was only 2% lower than last year.
Restaurant traffic has also declined, according to the reservations website OpenTable. Sitting while sitting is down 60% this week from a year ago, much worse than it was two months ago when they were down about 35%.
The $ 900 billion congressional grant package enacted last month should also help drive a recovery, say economists. A weekly unemployment benefit of $ 300 per week is provided in addition to an average weekly government benefit of approximately $ 320. Additionally, millions of Americans will receive payments totaling $ 600, and the Treasury Department announced Thursday that it will run out of 8 million of those payments this week.
Late Wednesday, Goldman Sachs raised its forecast for economic growth this year from its previous estimate of 5.9% to a robust 6.4%. The upgrade was partly based on the expectation that the Biden administration would provide further impetus.
Around 11 million people are currently officially unemployed. Millions more have stopped looking for work, either because they are discouraged about their prospects or because they are concerned about contracting the coronavirus and are not considered unemployed.
Friday’s monthly job report, the last of Donald Trump’s presidency, shows the nation has 3 million fewer jobs than four years earlier. This makes Trump the first president since Herbert Hoover (1929-1933) to experience a net loss of jobs at the start of the Great Depression.
All job losses during the Trump administration came after the pandemic. Previously, the unemployment rate had fallen to a 50-year low of 3.5%. Even so, Trump had promised to create 25 million jobs in four years.