Although the unemployment and poverty rates were at record lows in the United States at the end of 2019, the crisis linked to the pandemic changed everything. The American economy needs a relief plan that is being blocked for the time being because of the opposition between Republicans and Democrats.
Donald Trump appears to be delighted by the economic rebound the United States has experienced: In September, the world’s top economy had recovered 11.4 million jobs, half of the 22 million jobs lost in March and April during the outbreak of the COVID-19 crisis. The truth, however, is that this number is a catastrophe for the president: The unemployment rate (7.9 %) has not been this high before an American presidential election since World War II. Trump has lost one of his campaign’s most compelling pitches: his economic record.
In 2019, at the end of his third year as president, the United States was at its best, as evidenced by uncontested statistics: Unemployment was the lowest it had been in 50 years, even for African Americans, and the poverty rate was at an absolute low since the 1960s, along with a record median income and economic growth that surpassed Europe’s.
All this was done with a budget deficit deemed unsustainable at the time, close to 5% of the country’s gross domestic product, and a monetary policy that took the deficit into account. But grievances against this overspending were tuned out. Trump could win it.
A Disastrous Choice
The potential to win fell apart, though, due to the COVID-19 crisis. As opposed to what had often happened in previous crises, the U.S. government did not procrastinate. As early as March, the U.S. Federal Reserve flooded the economy with cash, thus averting bankruptcy, while Democrats and Republicans in Congress distributed money freely. Maybe a little too freely because, as the following months showed, the windfall effects were considerable. But the Fed achieved a societal result that, until August, allowed Americans to preserve their income and contain human tragedy.
But there’s still more work to be done and nothing is going as planned. The COVID-19 crisis continues to grow and has been exacerbated by the push by Trump and the Republicans to force the economy back open. It was possible to contain the disease, as New York showed, but politically, Trump did the opposite, which has proven to be disastrous for public health and counterproductive for the economy. As China recovers, a second economic downturn is shaping up, with massive layoffs in tourism and air transportation, permanent closures of small businesses, and local communities going bankrupt, which will lead to the closure of social services and schools.
All of this means a new plan is needed to help the economy. Trump wanted to bypass Congress, but was unsuccessful because he does not have the power to do so. Republicans and Democrats are unable to get along, with Republicans refusing to bail out the states and cities most affected just because many are Democratic. This is explainable one month before an election that is taking place in a hateful climate, but that is hardly a defense.
This crisis is hitting the weak, while another part of America is reaping the dividends of the digital revolution. Make no mistake: America 2.0 — that of Amazon, Zoom, Netflix, telemedicine — is doing wonderfully, boosted by COVID-19 and more powerful and richer than ever, thanks to the surge on Wall Street. Wall Street’s contribution to the economic recovery seems inevitable. But if Trump loses the election, he will not be the one to manage it.