Interestingly enough, Wall Street Journal this holiday weekend must finally give a rosy picture of the ongoing economic recovery, as observed in August.
While noting 1.4 million more people got jobs, defying the pessimists, this helped bring 10.5 millions jobs in the last 4 months, or about half of the lost jobs due to the recession started in February.
This, together with an average increase in hourly wages of 4.65%, helps to support the most important recovery in consumer spending—constituting 70% of total GDP.
Further, it was fueled by pent-up demand in preceding months with increased savings and, surprisingly, the favorable impact of wealth effects from rising home and stock prices. Home prices are up 12% from last August, and the DJ index rose a superb 51% since the March 23 trough.
Manufacturing is also rebounding, with the manufacturing index in August hit a 21-month high.
These observations are most strongly supported by the Atlanta Federal Reserve’s (thru GDPNow formula) prediction that 3rd quarter growth (for July-September 2020) will be nearly a whopping 30 percent annualized rate (or year-over-year basis).
This is quite an encouraging prediction for the near future.
But more shocking is a candid conclusion by the leftist WSJ as follows :“The economy still has a long way to go to return to its pre-Covid heights, and that will take time and probably a vaccine. Covid aside, the biggest barrier to recovery now is election uncertainty and the potential for anti-growth policies if Democrats take the Senate as well as the House and Presidency. Meanwhile, happy Labor Day”.
Luckily, more and more people, including in particular the mainstream media, are beginning to see the truth./.
Pham Do Chi, Ph.D.
Photo: Hiroyuki Takeda