Viral surge, fiscal fight may sway US voters more than data

A combination picture shows US President Donald Trump and Democratic presidential nominee Joe Biden speaking during the first 2020 presidential campaign debate.
A combination picture shows US President Donald Trump and Democratic presidential nominee Joe Biden speaking during the first 2020 presidential campaign debate.
Image: REUTERS/ BRIAN SNYDER

A surge in Covid-19 cases in a number of US states and roller-coaster prospects for new pandemic aid from Congress are threatening to push the importance of traditional economic data to the back burner for voters in the November 3 election.

Overall, likely voters continue to say they have more confidence in U.S. President Donald Trump's ability to create jobs than Democratic challenger Joe Biden.

But the former US vice president leads in voters' assessments of each candidate's ability to deal with the pandemic, and he also has the edge in the presidential race, according to the most recent Reuters poll.

Trump, who spent three days in a military hospital after being diagnosed with Covid-19 last week, called off talks this week between the White House and US House of Representatives Democratic Speaker Nancy Pelosi on a new fiscal stimulus package.

The president, who is seeking reelection in the Nov. 3 vote, has partially reversed that stance, saying he would support piecemeal legislation to provide funding for small businesses and airlines and stimulus checks for individuals. On Thursday, he said the negotiations had restarted.

Trump's fellow Republicans in Congress have resisted new aid, in part out of concern over adding to the federal government's soaring debt. Pelosi, who has led Democrats' push for a broad package that includes help for state and local governments and out-of-work Americans, signalled on Thursday that an agreement was not close.

Failure to pass additional government stimulus would slow the economic recovery and hit low-income families and communities of colour particularly hard, Federal Reserve Chair Jerome Powell and several of his colleagues warned this week.

In this “broken-crockery view, if you run the economy subpar for too long, bad things happen, and potential output is impaired,” said Vincent Reinhart, a former Fed economist who is now the chief economist at Mellon.

One bright spot this week in the economic data was a report showing the US services sector grew faster than expected in September.

But the number of Americans relying on some form of unemployment insurance remained stuck above 25 million in the week ended September 19, and the number of people filing new jobless benefits claims remained elevated for the week ended October 3.

An even bigger factor for voters may be the surge in Covid-19 infections in Wisconsin and a recent increase in Michigan, two key battleground states in the presidential election. Nationwide, infections continue to rise, data collected by Johns Hopkins University shows.

The disease caused by the novel coronavirus has killed more than 211,000 people in the United States, according to a Reuters tally.

“It remains our forecast that the pace of the economic rebound will continue to slow while the virus remains a threat and in the absence of additional fiscal stimulus,” JP Morgan economist Jesse Edgerton wrote in a note on Thursday.

Economists at several Wall Street banks forecast some kind of stimulus package no matter which candidate wins, but say a Biden presidency, if Democrats also retake control of the US Senate, would likely result in a bigger one.

In the meantime, Edgerton noted, “we suspect that consumers and businesses would largely muddle through if the recent upswing in virus cases continues, as they did during the summer.”


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