With the presidential election drawing near, a litany of data released this week shows the US economy continues to climb out of the recession caused by the coronavirus pandemic, but progress is slowing.
Now, with infections on the rise, economists say many voters may be weighed by a gloomy outlook when deciding whether to back the incumbent president, Republican Donald Trump, or his challenger, Democrat Joe Biden.
“I would think the overall mood of the voter going in is not joyous right now,” said Kathy Bostjancic, chief US financial economist for Oxford Economics.
The economic data released this week largely beat expectations and showed incomes are rising, consumers are spending more and output is increasing. It also revealed an economy still far from where it was before the pandemic, with some consumers likely needing more help to stay aloft.
That divide was present in the pitches Trump and Biden made to voters this week, with Trump vowing to deliver more growth in a second term and Biden emphasizing the economy was still in a deep “hole.”
Friday’s report showed consumers’ incomes are recovering slowly. It also showed their spending is more concentrated on goods, such as cars, clothing and shoes, while spending on services, including travel, remained low.
The pattern shows many consumers remain cautious about how they spend because of budget constraints, fear of getting sick and activity restrictions, said Bostjancic. Some who lost jobs are spending down savings and dim prospects for more fiscal aid in the near future could be impacting consumers’ attitudes, she said.
The reports also show that after an historic third-quarter surge, the economy is recovering more gradually now, said Jason Pride, chief investment officer for private wealth at Glenmede. It could take time for industries dependent on close human interaction to fully recover, Pride said.