In Defying the Odds, we discuss the tax and economics issue in the 2016 campaign. The update includes a chapter on the 2018 midterms. In 2020, forecasters always said, a good economy could tip the election in Trump's favor. A bad economy would drag him down.
And Trump is weak at managing expectations:
Rachel Siegel and Andrew Van Dam at WP:The Economy is coming back fast! https://t.co/sp4GKeJfDA— Donald J. Trump (@realDonaldTrump) July 14, 2020
The U.S. economy shrank 9.5 percent from April through June, the largest quarterly decline since the government began publishing data 70 years ago, and the latest, sobering reflection of the pandemic’s economic devastation.
The second quarter report on gross domestic product covers some of the economy’s worst weeks in living memory, when commercial activity ground to a halt, millions of Americans lost their jobs and the nation went into lockdown. Yet economists say the data should also serve as a cautionary tale for what’s at stake if the recovery slips away, especially as rising coronavirus cases in some states have forced businesses to close once again.
GDP shrank at an annual rate of 32.9 percent, according to the Bureau of Economic Analysis, the agency that publishes the statistics on quarterly economic activity. While it usually stresses the annualized rate, that figure is less useful this quarter because the economy is unlikely to experience another collapse like it did in the second quarter.
Still, while a tailspin at the second quarter rate is unlikely, the nascent recovery that began appearing earlier this summer appears to be in jeopardy.
On Wednesday, Federal Reserve Chair Jerome H. Powell warned that the most recent surge in infections has begun to weigh on the economy, while reemphasizing that a recovery can’t be sustained unless the virus is under control.
“We’re still digging out of a hole, a really deep hole,” said Ben Herzon, executive director of IHS Markit. “The second quarter figure will just tell us the size of the hole we’re digging out of, and it’s a big one.”
Tami Lubby at CNN Business:
In yet another sign that the economic recovery is teetering in a resurgence of coronavirus cases, the number of Americans filing first-time unemployment claims rose for the second week in a row.
Some 1.4 million people filed for initial jobless claims last week, up 12,000 from the prior week's revised level, which was the first increase in 16 weeks.
On an unadjusted basis, 1.2 million people filed first-time claims, down 171,000 from the week before. The seasonal adjustments are traditionally used to smooth out the data, but that has tended to have the opposite effect during the pandemic.
Continued claims, which count workers who have filed for at least two weeks in a row, stood at 17 million for the week ending July 18, up 867,000 from the prior week's revised level. These seasonally adjusted claims peaked in May at nearly 25 million
Jeffrey Bartash at MarketWatch:
Consumer confidence swooned in July amid a rash of new coronavirus cases in many U.S. states, signaling a rockier economic recovery in the months ahead.
The index of consumer confidence fell to 92.6 this month from a revised 98.3 in June, the Conference Board said Tuesday. Economists polled by MarketWatch had expected a reading of 96.0.
The level of confidence is still above its pandemic low of 85.7, but it’s likely to be a long time before it returns to its pre-crisis peak. The index stood near a 20-year high at 132.6 in February before the pandemic struck.
The economy is not expected to make a full recovery for at least a year or two.