On November 8, U.S. news outlets called the 2020 election, but investors had already voted with their money. After the worst week since March, stocks soared election week and recouped all of the previous week’s losses–and then some. The S&P 500 soared 7.3% the best presidential election week since the 1932 election.
Wall Street interpreted a Joe Biden presidency, a Republican-controlled Senate and a Democratic House as a win for corporate America, because with divided government, the thinking goes, it is unlikely that there are going to be enough votes to enact a tax increase on corporations or on the top 2% of individuals. Any potential increase in regulation for the energy, financial services, or health care sectors could be outweighed by a reversal of the trade war with China.
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While gridlock might be good for stock investors, what about the overall economy? On that front, the news is mixed. As Federal Reserve Chair Jerome Powell noted two days after the election, “the path of the economy will depend significantly on the course of the virus,” and the recent rise in cases “is particularly concerning.” Most analysts agree that the first round of stimulus helped the economy recover to where it is today, which is why the next round is desperately needed to get through the winter months.
Fresh off his election win, Senate Majority Leader Mitch McConnell said Congress should focus its energy on approving a new coronavirus stimulus bill “by the end of the year” and it would possibly “do more for state and local governments.” That would be a relief, because without any more money, 5.3 million workers could lose their jobs by the end of 2021 if municipalities don’t get a bailout, according to the Economic Policy Institute.
Meanwhile, the October employment report was a good one. The economy added 638,000 jobs and the unemployment rate dropped a full percentage point to 6.9 %, as more people entered the labor force and got jobs. With the sixth consecutive month of gains, the labor market has recouped about 12 million of the 22 million jobs lost due to the pandemic. But there are still problems, including:
The pace of job growth is slowing down.
There are still 10.1 million fewer jobs than in February. The losses are still 15% worse than those experienced in 2008-09.
As the number of COVID-19 cases rise, there could be limits to the number of jobs added this winter, especially in leisure and hospitality. Nine percent of businesses planned to lay …read more
Source:: The Mercury News – Entertainment