![]() ![]() She also expects the sizzling housing market to moderate. Meyer, the Bank of America economist, cautioned that consumers’ robust online spending on goods in recent months may hold down some future purchases. The prospect of key relief programs fully lapsing at the end of the year has been the impetus for House and Senate leaders’ 11th-hour negotiations this week for additional aid.Īnalysts are hopeful that lawmakers will strike a deal, including expanded jobless benefits, to cushion many households until the pandemic eases. Yet with the swift passage of a $2.2-trillion federal relief package in the spring, many of them have been able to keep up their spending - until recently. The pandemic has hit lower-income households especially hard. The 2008 housing bust and highly leveraged lending hammered the financial system and kept consumers languishing in debt for years after the Great Recession ended in mid-2009. The difference this time is that the economy didn’t slide into the recession overloaded with debts and subprime mortgages. White and higher-income Californians are most likely to believe today’s children will be worse off than their parents, a new statewide survey finds. To put that in historical perspective, during the financial crisis in 2008 and its aftermath, monthly car sales remained below the 16-million-a-year rate for 75 straight months, according to Moody’s Analytics.īusiness The Golden State’s future? Most Californians are pessimistic In April, purchases of autos plunged to an annual rate of 9 million vehicles, but they bounced back in September and October to an annual pace of 16 million. Though retail sales fell in November, household spending on goods has fully recovered and then some, thanks to a sharp rebound for car sales, home furnishings and clothing. Consumer spending, which accounts for about 70% of the gross domestic product, is even further along in its recovery. It has already made up about two-thirds of the output losses suffered in early spring. Yet the economy overall has been surprisingly resilient, even as the slowdown has fallen hardest on the most vulnerable Americans. Moreover, the rollout of vaccines will take months to reach enough people, while infections, hospitalizations and deaths are expected to continue at high levels through the winter. No economic surge can erase the damage COVID-19 has inflicted, especially among low-income workers and members of racial and other minorities. There is nonetheless plenty of uncertainty ahead, particularly about how quickly and widely the population will be inoculated, and just when people will feel comfortable enough to return to their pre-pandemic routines. The forecasting firm last week sharply upgraded its economic growth projection for next year, to 4.3% from 3.1%, in good part because of better-than-expected news on vaccines and expectations of more federal relief. “There absolutely is a strong case for that pent-up demand to be unleashed, perhaps starting by next summer,” said James Bohnaker, an economist at IHS Markit. The central bank’s optimism was echoed by some outside economists. Powell said his expectation is that the economy “should be performing strongly” in the second half of next year. You have to think that sometime in the middle of next year, you will see people feeling comfortable going out and engaging in a broad range of activities.” “At the same time, people are getting vaccinated now. Powell told reporters at a virtual news conference. “The coming months are going to be challenging,” Fed Chairman Jerome H. While carefully hedging with caveats, the Fed raised its growth projections, said it would keep buying bonds to support growth, and indicated it would hold interest rates near zero for at least three years. ![]()
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