(Bloomberg Opinion) — Joe Biden has been elected to be the next President of the United States. Now he’ll have to get creative.
When the President-elect takes office, he’ll confront the country’s two most acute challenges: an ongoing Covid-19 pandemic and the economic damage it’s wrought. But he’ll have an uphill battle to enact the sort of bold policy agenda that many supporters were hoping for.
Barring a January surprise in Georgia’s runoff election, Republicans are likely to retain control of the Senate, denying Biden the unified control of government that his predecessors enjoyed when they came into office. With traditional relief and stimulus measures limited by opposition party intransigence, Biden might still be able to pass policies designed to resuscitate the stricken service sector directly.
The U.S. economy has bounced rapidly back since April, but only partially. Employment has only recovered about halfway to where it was before Covid-19 struck, giving it the shape of a reverse square-root sign:
Lower-wage employees, who tend to work at the local services businesses most deeply impacted by the virus, are suffering more.
The economy is being afflicted by two simultaneous maladies. The first is continued fear of the virus, now in the middle of a devastating third wave. Fear, more than lockdowns, has kept Americans shut inside their homes, reluctant to take the risk of going out to shop or eat. That in turn gives rise to the second problem of decreased demand, which filters through the entire economy.
Fear of the virus will eventually be reduced by vaccines, which may become available in early 2021. A national program of testing and contact tracing — which President Donald Trump long resisted — would also help speed Covid-19 on its way, and should be a priority for the incoming administration. But even when the virus is gone, the economy is likely to remain depressed for awhile, as the overhang of unemployment works its way out of the system.
Bold relief measures, of the type that sustained Americans through the pandemic’s dark early days, probably won’t be forthcoming given the GOP Senate’s inevitable turn towards austerity. The same is true of traditional fiscal stimulus, such as a burst of infrastructure spending, that might help boost demand back to normal levels. But there might be a chance for more targeted measures to help the sectors of the economy that Covid-19 has hurt the most — local services.
Restaurants, shops, and other establishments that cater in person to customers have gone bust in large numbers. After the threat of the virus has passed, the U.S. government might try to resuscitate local economies by subsidizing new shops to fill the empty storefronts that now dot America’s urban landscape. Some of these new establishments would be run by the same owners whose businesses went under during the pandemic, while others would be run by enterprising newcomers. But all would be able to draw on the local pool of unemployed, most of whom were working in these same types of businesses in 2019.
Subsidizing new local businesses would accomplish several goals at once. It would put people back to work at jobs they know how to do, and start pumping demand through the ecosystems of local economies. It would help prevent cities’ commercial retail space from being riddled with unsightly boarded-up vacancies — a blight that hurts viable businesses next door. And it would help sustain and preserve the small business class.
This last aspect might make local business formation subsidies attractive to Republicans in the Senate; small businesspeople are a reliable Republican constituency. Additionally, this policy would be highly targeted; the subsidies could last only until a town’s existing commercial vacancies had been mostly filled, limiting the cost of the program and avoiding the appearance of handing out money at random.
Strict free-market adherents might worry that this plan would delay or prevent needed transformation in the U.S.’s industrial mix. The pandemic has shifted demand from local services to e-commerce; people are watching Netflix instead of going to movie theaters, and ordering things off of Amazon instead of buying them in stores. Some will question whether reversing that shift should be an economic priority.
But the benefit of quickly and cheaply resuscitating local U.S. economies far outweighs the danger of slightly delaying the evolution to a more online future. In fact, local business formation subsidies will simply accelerate a move that’s already in place; new business filings have been above trend since August, as entrepreneurs take advantage of cheap rents and labor. The local economy is restoring itself already — it could just use a push to get the job done faster.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
©2020 Bloomberg L.P.
Remarks by President Trump on the Economy – Whitehouse.gov
James S. Brady Press Briefing Room
12:31 P.M. EST
THE PRESIDENT: Well, thank you very much. And I just want to congratulate everybody. The stock market, Dow Jones Industrial Average just hit 30,000, which is the highest in history. We’ve never broken 30,000. And that’s despite everything that’s taken place with the pandemic. I’m very thrilled with what’s happened on the vaccine front. That’s been absolutely incredible. It’s — nothing like that has ever happened medically. And I think people are acknowledging that, and it’s having a big effect.
But the stock market has just broken 30,000. Never been broken, that number. That’s a sacred number: 30,000. Nobody thought they’d ever see it. That’s the ninth time since the beginning of 2020, and it’s the 48th time that we’ve broken records in — during the Trump administration. And I just want to congratulate all the people within the administration that worked so hard. And most importantly, I want to congratulate the people of our country, because there are no people like you.
Thank you very much, everybody. Thank you.
12:32 P.M. EST
China’s Li Sees Economy Returning to ‘Proper’ Range Next Year – Yahoo Canada Finance
The Canadian Press
NEW YORK — Best Buy Co. reported fiscal third-quarter results that blew through analysts’ expectations as the nation’s largest consumer electronics retailer enjoyed surging demand for items like home theatre and appliances that help people learn, cook, work and connect in their homes during the pandemic.
The Richfield, Minnesota-based retailer, said that third-quarter profits rose 33% while sales were up 21%. Sales at stores opened at least a year rose 23%, while online sales in the U.S. surged 174%.
Still, shares fell 5% in Tuesday morning trading as Best Buy warned that sales could slow down during the current quarter as the number of virus cases surge.
“As we start the fourth quarter, the demand for the products and services we sell remains at elevated levels, but similar to last quarter, it continues to be difficult for us to predict how sustainable these trends will be,” Matthew Bilunas, Best Buy’s chief financial officer, told analysts during the call. “In fact, we are seeing COVID cases surge throughout the U.S. and Canada at a time of significant holiday volume through our stores, online and supply chain. “
Bilunas also noted other factors such as potential government stimulus, the risk of continued high employment and the availability of inventory like computers to match customer demand.
Best Buy joins big box stores like Walmart, Target, Home Depot and Lowe’s in reporting strong fiscal results. Unlike mall-based stores and other businesses that sell non-essentials, big box retailers were allowed to stay open during the lockdown in the spring and have all seen their dominance increase as consumers focus on necessities and home-related activities.
Before the pandemic, Best Buy had expanded its services to such options as at-home consulting and same-day delivery. It also sped up its online shipping. But the pandemic has forced Best Buy to adjust its operations and launch new shopping experiences that provide more convenience and safety for customers.
Early fall, Best Buy began using 250 of its stores as fast-shipping hubs for online orders. It’s now adding 90 more locations during the holiday period. It says its goal is to have all 340 stores ship more than 70% of its ship-from-store units during the holiday quarter. It’s also testing new store formats as it transforms locations to fulfilment hubs.
For example, in four Minneapolis locations, Best Buy reduced its square footage for shopping to 15,000 square feet from an average of 27,000. The product assortment on the sales floor will still include the primary categories these locations featured before the remodel, but instead the focus will be on the most popular items, the retailer said. The remodels will result in increased space for staging product for in-store pickup and to help ship-from-store transactions, as well as provide the ability to stage inventory for items that may not be on the sales floor.
Best Buy reported fiscal third-quarter profit of $391 million, or $1.48 per share, compared with $293 million, or $1.10 per share, in the year-ago period. Earnings, adjusted for restructuring costs and amortization costs, were $2.06 per share.
The results exceeded Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.76 per share.
The consumer electronics retailer posted revenue of $11.85 billion in the period, also beating Street forecasts. Eight analysts surveyed by Zacks expected $11.02 billion.
Shares fell $6.69 to $1150 in late morning trading. Shares have increased 39% since the beginning of the year, while the S&P 500 index has increased 11%. The stock has increased 69% in the last 12 months.
Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on BBY at https://www.zacks.com/ap/BBY
Anne D’Innocenzio, The Associated Press
German economy grew by 8.5% in third quarter, but recession fears grow – The Guardian
BERLIN (Reuters) – Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.
The stronger-than expected rebound was mainly driven by higher household spending and soaring exports, the office said.
“This enabled the German economy to make up for a large part of the massive decline in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” it added.
The reading marked an upward revision to an earlier flash estimate of 8.2% growth, and followed a 9.8% plunge in the second quarter.
The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since Nov. 2, but shops and schools remain open.
Chancellor Angela Merkel and regional state premiers are planning to extend the “lockdown-light” on Wednesday until Dec. 20, according to a draft prepared for their meeting.
A contraction in the service sector is expected to weigh heavily on gross domestic product in the fourth quarter, while lockdown measures in other countries are likely to hit export-oriented manufacturers as well.
DIW economist Claus Michelsen said a decline in economic output was therefore on the cards, with initial estimates indicating a GDP drop of around 1% in the final quarter.
“Germany and many important trading partners are likely to slide back into recession,” Michelsen said.
(Reporting by Michael Nienaber and Rene Wagner; Editing by Riham Alkousaa and EKevin Liffey)
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