can-surprise-q3-economic-growth-turn-sagging-consumer-confidence-around?

The financial volatility stemming from the pandemic has turned excellent news into simply lagging indicators.

While U.S. gross home product for the third quarter was revised up barely to 33.4 p.c by the Commerce Department, fourth quarter GDP is prone to be impacted by ongoing coronavirus infections what seems to be will increase in first-time jobless claims.

Growth within the third quarter was fueled partly by over $3 trillion in pandemic reduction, bringing preliminary third-quarter beneficial properties to 33.1 p.c earlier than the revision. That was a major turnaround from the 34.1 p.c contraction within the second quarter, when many nonessential retailers had been quickly closed firstly of April to assist curb the unfold of Covid-19. Retailers, similar to shops and specialty chains, started reopening in early May however restricted companies to curbside supply. Many didn’t full the gradual reopening course of till June, and that was solely after they instituted new procedures similar to social distancing and sanitizing protocols.

While Congress on Monday evening accredited one other support bundle for $900 billion, the stimulus coming so late within the yr most likely received’t assist fourth quarter GDP. And it may not do a lot to assist in the primary quarter of 2021. Americans who qualify to obtain a test will get solely $600 this time round, though the reduction bundle will prolong sure advantages that had been set to run out or had already expired, similar to federal unemployment advantages and the supplemental help program for meals reduction often known as SNAP.

The incoming administration beneath President-elect Joe Biden should push for extra support for small companies and even reduction funding for state and native governments, which was nonexistent within the present bundle and will portend extra municipal layoffs within the months forward.

“Retailers are encouraged by the passage of this economic relief package that will keep the economy open and moving in the right direction as the fight against the Covid-19 pandemic continues. The additional stimulus and extension of expired relief measures will help protect families, support health care providers and sustain small and independent businesses,” Matthew Shay, president and CEO of retail commerce group the National Retail Federation, stated. “The November retail sales report shows that consumers held back on spending, and more robust stimulus is needed to shore up our economy. These are trying times for many American families, and a strong stimulus bill is critical to the continued recovery of the economy and the retail industry, which creates employment for 52 million working Americans.”

Shay added that the retail trade has invested billions of {dollars} all through the pandemic to make sure the well being and security of staff and prospects. He stated that the NRF will proceed to advocate for monetary reduction for American employees, households and companies impacted by the coronavirus. “Our hope is this latest stimulus will be a down payment on economic relief next year,” Shay stated.

Steve Lamar, president and CEO of the American Apparel & Footwear Association, stated that extra will should be executed to assist the U.S. financial system in 2021.

“Covid-19 has wreaked havoc on our world and created an economic crisis unlike any previous. While this new bill provides essential aid, it is only a down payment on what the American economy needs to make it to the other side. The job is not done, and more work will be needed in 2021. This will be job one for the incoming administration and the new Congress, and we look forward to working with them, and our diverse coalition, to save the American economy,” Lamar stated.

The U.S. now has greater than 18 million reported instances of the virus. So far, there have been 319,763 American deaths. Those numbers are anticipated to extend within the weeks forward following the Christmas vacation interval. And regardless of the beginning of Covid vaccinations globally, most require a second shot three or 4 weeks after the primary, relying on which vaccine is acquired.

First-time jobless claims within the U.S. have additionally been on the rise once more. An enhance was anticipated for the week ended Dec. 3, largely due to the issue in adjusting for the prior week’s Thanksgiving vacation. The report for Thanksgiving week stated that new jobless claims totaled 712,000. The Dec. 10 report for the week earlier noticed preliminary claims spike as much as 853,000. The final report from the Labor Department on Dec. 17 noticed claims rise once more to 885,000 for the week ended Dec. 10. The subsequent report is slated for Thursday for the week ended Dec. 17.

Consumers are feeling financial stress as effectively. On Tuesday, The Conference Board’s Consumer Confidence Index declined in December, on prime of its lower in November. The Index is now at 88.6, down from 92.9 in November. The indices within the Index had been combined in December. The Present Situation Index fell sharply to 90.3 from 105.9, whereas the Expectations Index, which measures short-term outlook over the subsequent six months, rose to 87.5 from 84.3.

“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of Covid-19 remains a drag on confidence,” Lynn Franco, senior director of financial indicators at The Conference Board, stated on Tuesday. “Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”

The Conference Board’s financial forecast for the U.S. is pegging progress of two.8 p.c for the fourth quarter whereas the nation continues to cope with the pandemic. Looking at 2021, it stated key variables embrace the dimensions of the continuing Covid resurgence and any ensuing lockdowns, the standing of labor markets, the timing of the Covid vaccine rollout and the diploma to which volatility within the U.S. political transition impacts client and enterprise confidence.

While President-elect Biden has secured the required Electoral College votes, two runoff elections on Jan. 5 will decide which social gathering controls the Senate. Two Senate seats are up for grabs, and Democrats, who narrowly management the House, are hoping for wins to allow them to have a Democratic sweep. Barring a Blue Wave win, the outcome will likely be a cut up authorities, with the Senate battling every financial progress measure or stimulus proposal from the House and incoming Administration.