Despite the summer surge in corona virus cases and the end of massive federal aid, the U.S. economy continues to grow, but millions of Americans are being abandoned or abandoned.
As the recession approached, the broader economy performed better than expected. Recruitment increased again in August, consumer spending remained stable, manufacturers are still booming, and demand for homes and new cars is staggering.
Data for the coming week is likely to show another strong increase in retail sales in August and better production among manufacturers in September, indicating that the U.S. recovery is continuing but continuing.
A new divide has emerged between those whose livelihoods have been severely disrupted by the corona virus pandemic and those who have not.
Consider a couple of industries: finance and hospitality.
The unemployment rate for banks, insurers, Wall Street brokerages and other money management companies was just 4.2 percent in August. This is not higher than the national unemployment rate just before the outbreak in March.
Read:U.S. consumer prices rose for the third month in a row as used car prices soared
In contrast, the unemployment rate for companies engaged in travel, hotels, dining, other entertainment and hospitality was 21.3% last month. Worst of all, these jobs offer far less than professional jobs in areas such as finance and technology.
However, many important economic reports on the economy say very little about this division.
Retail sales and consumer spending are stronger than expected. This largely reflects the habit of high-income people with secure jobs working from home. They can afford to spend – that’s what they do.
The high demand among these individuals helps to explain the strong sales of homes and autos. They have more reason to spend making a massive comeback in the stock market, which brought their overall value closer to the pandemic level.
Steve Blitz, chief economist at TS Lombard, said it has long been an industry maximum, with 20% of wealthy Americans carrying up to 80% of all discretionary costs. If so now, they make recovery better than that.
Millions of unemployed Americans still do not have such luxuries, especially after the $ 600 extra in federal unemployment benefits expired in July.
“This is a significant loss for people who don’t get it now,” Blitz said.
The loss of income of these Americans and the damage done to airlines, hotels, restaurants and retailers will eventually penetrate the broader economy and affect high-income earners and the stock market.
Earlier this month, a collection of leading airlines, hotels and mall operators announced that Washington would permanently cut more jobs if it did not provide additional assistance. U.S. unemployment benefit claims have risen for four consecutive weeks, another warning sign of the problem ahead.
Read:Unemployment claims rose for the fourth week in a row, signaling a slowdown in the labor market
The Federal Reserve has met this week to assess the economy, and top central bankers continue to argue for more financial relief from Congress.
The federal government, which is usually too lazy to advise lawmakers, fears the recovery will be flagged if Congress does not blow more wind.
Wildfires do not help in California, the state with the largest economy in the country. The fire displaced many people and increased applications for unemployment benefits.
Nothing has changed in Washington so far. Democrats blocked the “Skinny” Republican bill last week, which would have helped the economy a little more. The Democrats want a big spending bill that Republicans oppose.
With the crucial 2020 election looming in November, another major funding package is seen to be declining day by day. Probably the only thing Congress can do, analysts say, is the rapid slowdown in recovery.
However, this did not happen in August, and the economy does not appear to be booming in September.
“As we could have believed a few weeks ago, it now seems completely credible that we are moving towards elections without any new steps,” said Douglas Porter, chief economist at BMO Capital Markets.