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CRITICAL CONDITION

America’s V-shaped recovery is in danger of flatlining

Mike Pence arches an eyebrow at the vice presidential debate.
REUTERS/Lucy Nicholson
Mike Pence touts Trump’s economic record.
  • Nicolás Rivero
By Nicolás Rivero

Tech Reporter based in New York

Published Last updated

US vice president Mike Pence sought to sidestep senator Kamala Harris’s criticisms of the Trump administration’s handling of the coronavirus pandemic by shifting the focus of Wednesday’s vice-presidential debate to the economy.

“The American comeback is on the ballot,” he said. ”President Trump and I will keep America growing. The V-shaped recovery that’s underway right now will continue with four more years of president Donald Trump.”

That V-shaped recovery, however, is in danger of collapsing even before the next US president begins his term on Jan. 20, 2021. Data from recruiting sites Glassdoor and Indeed showed hiring weakening in September, with job postings falling 0.3% after monthly gains between 5% and 7% during the summer. The economy added just 661,000 jobs last month, notching the smallest gains since May, and the portion of the working-age population employed or looking for a job dropped after a slight uptick in August.

National coronavirus cases, meanwhile, have picked up since their post-peak lows in early September, which could lead to another round of business closures, and deeper losses to the economy.

A day before the debate, US federal reserve chairman Jerome Powell warned that without further stimulus the nascent recovery could flatline. The first round of federal aid was key to jumpstarting the economy, he pointed out, and a second installment could head off a worst-case scenario in which a stuttering recovery, combined with the effects of the pandemic, could create a vicious cycle.

“There is a risk that the rapid initial gains from reopening may transition to a longer than expected slog back to full recovery as some segments struggle with the pandemic’s continued fallout,” he said.

But shortly after Trump’s return to the White House after his Covid-19-induced stay at Walter Reed Medical Center, he called off stimulus negotiations between US House speaker Nancy Pelosi and Treasury secretary Steven Mnuchin. Democrats and Republicans remained roughly $1 trillion apart on a final price tag. Stock prices tanked after the tweet.

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