As COVID-19 cases mount across southern and western states due to premature reopening, the economic recovery is stalling. Layoffs are resuming as infections rise.
Reports of progress toward a vaccine are encouraging, but medical experts warn that the roll-out of an effective vaccine will take a year or more. But if Trump had his way, a vaccine would never reach Democrat-governed states, Puerto Rico, or people he deems “never-Trumpers.” His racism and contempt will compromise every effort to stem the plague.
Trump’s threat to withdraw federal funds from schools that do not fully reopen shows his intent: more deaths are good for him because it gives him more grounds (along with the protests) to undermine the election with states of emergency.
The stock market is beginning to figure that out. But remember: while it’s true the stock market generally goes up as the real economy goes up, the stock market is not a measure of what’s in your wallet. It is a measure of investor expectations of future profits and/or capital gains. Depressions can, and usually do, redistribute slow or no-growth wealth to the rich, who own 90% of stock. Thus stock markets can go up even if GDP goes flat or drops, and you and half your community are laid off.
But that is unlikely in the next period, as markets price in what they previously underestimated: the extreme damage Trump can do to any American “future.” The next stage after that will be “pricing in” Biden.
The trade wars with China may look like a political winner to some, but they are stupid strategically. Huawei, for example, services and builds most of the telecom infrastructure in 179 countries, and China is building out 5G wireless capacity five times faster than anyone in the world. I had a $79 Huawei phone that out-performed a $200 iPhone (both were built in China). China also has “factory-floor-of-the-world” infrastructure in place, on a vast scale.
Businesses are also finding that “half-open” is not profitably open, and reserves are dwindling for Main Street businesses. Wells Fargo posted the biggest loss since the 2008 crash, so the banking sector, except for JPMorgan, is not as strong as analysts hoped. Corruption from the Trump bailouts may ruin the ability of the Fed to save the financial sector.
Working families, states, and counties face disaster as unemployment funds expire at the end of July unless extended, and as state funds for services dry up from crashed tax revenues.
On the strategic front, Trump’s (and the UK’s) boycott of Chinese technology and immigrant scientific talent is idiotic. Chinese industrial policy is plowing aggressively ahead on nearly every high-tech and scientific frontier, despite the pandemic and global depression.
Is there any good news? Yes. If we can get to the election without Trump canceling or wrecking it, he will be finished. This means that by January, the process of recovery may be able to begin anew. But there is damage on many fronts, much to repair, and much that cannot be repaired. How many deaths will we see? Unknown. How many conflagrations as food and income run out for millions? Unknown.
The brighter light could be mass movements for racial justice, police transformation, COVID-19 recovery, and jobs/income protection, gaining momentum, through intensified actions and, if possible, strikes to help disable Trump’s assaults on the elections. The endorsement of Joe Biden for president by virtually the entire former Bush administration shows this is not impossible.
Normally, progressive economic advice is to spend oneself out of a recession. But the future is so chaotic and uncertain that there may be little relief from the scramble for crumbs in a desert; only the clear water of solidarity will save us.