APD | US economy to face a handful of difficulties after election

APD NEWS

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By APD writer Alice

The US economy is facing a lot of post-election difficulties, amid a record rise in cases of COVID-19 and expiration of federal benefits.

The US economy is at risk of facing new difficulties in two months from the November 3 election to January 2021, the period of time often used by the elected President to make plans for his term.

The biggest challenge to the US now is the sudden increase in COVID-19 cases, especially when the winter is coming. The situation can exacerbate the slowing business situation in the tourism, restaurant and hotel industries and further undermine the oil industry that has experienced price falls.

With cold weather forecast to restrict outdoor dining, 40% of all restaurant owners nationwide said they plan to stop their business in March without additional government support, according to a recent survey.

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Millions of Americans are also at risk of being disconnected to electricity and water as they are unable to pay for their bills, while the measures to protect renters, students with loans and unemployed Americans will expire later this year.

Tourism has yet to recover and even half of its business lost, according to the Transport Security Administration. Nearly 4 million jobs in the tourism industry have been lost during the pandemic and another 1 million could disappear by the end of the year without federal intervention. The largest hotel industry group said in September that 2 in 3 US hotels would not last another six months. Major airlines have already announced tens of thousands of furloughs by the end of the year after their federal aid programmes expired in September.

Democrats and Republicans in the Congress have moved further apart in recent weeks, with some Republicans raising concerns about government spending and Democrats demanding more action.

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Weekly emergency federal unemployment benefits have been cut for months. Several million people will start running out of basic unemployment benefits in mid-December. A separate federal unemployment programme for about 10 million contract workers and others not eligible for traditional unemployment insurance will expire on December 31.

The week after the election, the Supreme Court will pass the Affordable Care Act, which could cause tens of millions of people to lose health insurance. Amidst this situation, lawmakers must reach an agreement by December 11 to prevent the federal government shutdown.

The surge in COVID-19 cases has prompted cities and states across the US to impose new restrictions. There are nearly three months from the November 3 election to the new president's inauguration on January 20, 2021, the period of time when both public health experts and economists fear the SARS-CoV-2 will attack the US fiercely.

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James Knightley, head of the international economic division at ING Bank, said a more modest financial stimulus could mean that the growth prospects and corporate profits will not be as strong as expected.

Meanwhile, Matthew Luzzetti, chief US market economist at Deutsche Bank, said the Biden presidency with a Republican majority could turn into a bad scenario for economy in 2021 as Republicans are likely to oppose a large-scale stimulus package.

That will be bad news for millions of low- and middle-income Americans who are unemployed and struggling to find jobs in sectors like tourism and entertainment.

(ASIA PACIFIC DAILY)