Biden’s Covid plan must work. The economy depends on it



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While vaccine development has proceeded faster than many expected, distribution has lagged behind, in part due to the chaotic presidential transition amid the worst pandemic in a century.

“We won’t see a strong economic recovery until we achieve wide distribution of the vaccine,” said Kristina Hooper, chief global strategist at Invesco.

Kevin Hassett, former economic adviser to President Trump, told CNN Business that the US economy is facing a “downward spiral” that could cause GDP to contract sharply in the first quarter, like last year.
The pandemic has killed more than 400,000 Americans, and US health officials warn the death toll could reach 508,000 by mid-February.
Rochelle Walensky, the new director of the Centers for Disease Control and Prevention, told NBC on Thursday that she did not expect vaccines to be in every drugstore in America by February, despite such predictions from Trump officials. Biden’s goal is to dispense 100 million doses in the first 100 days – and the CDC official said that was still the plan.

Risk of “ dropping out ”

The timing is critical as Americans’ health restrictions and voluntary measures are crushing virus-sensitive parts of the economy, especially the service sector.

As the CNN Business Recovery Dashboard shows, box office sales, domestic air travel, and hotel occupancy rates all remain well below pre-crisis levels.

Millions of people whose jobs relied on restaurants, bars, hair salons, dry cleaners, movie theaters, cruise lines, hotels and countless other industries are out of work. The Back-to-Normal Index, designed by CNN Business and Moody’s Analytics, shows that the US economy is operating at just 81% of its early March level.

“The next step in the recovery has to be driven by the service sector. Without it, we will stall,” said Aneta Markowska, chief financial economist at Jefferies. “You cannot have a reopening of the service sector without putting the pandemic behind us.”

‘The vaccine has to get here’

George Harman, a Winchester, Va. Father of two, has dramatically cut his expenses since taking unpaid leave from his job at an auto dealership in early December. Harmans stopped working because he was worried about making his elderly parents who live with him sick.

“I could physically go to work, but is it worth dying or infecting someone in my house?” said Harman, who has a history of heart disease.

Like countless other Americans, Harman is not eligible for unemployment and lacks cash.

“The vaccine has to get here,” he says. “If I can get my parents vaccinated, I can risk it at this point. But I can’t go to a place where I know the virus has spread endemic and take it home.

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Biden plans to sign a series of executive orders to help those in need on Friday, including a step that could help people in a situation similar to Harman. The White House said Biden would ask the Labor Department to consider clarifying that workers who refuse unsafe working conditions can still qualify for unemployment insurance.
While executive orders can help, Biden needs Congress to pass legislation that would have a much bigger impact. Biden calls on lawmakers to push through his $ 1.9 trillion US bailout package, which calls for 1,400 stimulus checks for most of those earning less than $ 75,000, improved unemployment benefits, $ 350 billion in aid to state and local governments and $ 400 billion to beat the pandemic.

Harman hopes Congress takes action – before it runs out of money.

“We don’t like to carry billions and trillions in debt, but you are faced with a situation that occurs once every hundred years. You have to do what is necessary,” he said.

Wall Street is unfazed, for now

Although some economists and Republicans are concerned about the size of Biden’s proposal, Hassett, the former Trump economist, told CNN Business that he broadly supports the $ 1.9 trillion package.

Markowska, the Jefferies economist, said the rescue effort will help but not solve the underlying problem.

“We have pushed the recovery as far as possible without the service sector. Without it, we simply cannot progress – no matter how much fiscal stimulus we put in place,” she said.

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At least so far, Wall Street has been unfazed by the outbreak of the pandemic and the slow rollout of vaccines. The S&P 500 and Nasdaq finished at record highs Thursday, building on what was the best performance from election day to postwar inauguration day.

This is because the markets are being driven by the Federal Reserve’s emergency policies that force investors to bet on stocks. And investors are optimistic that the economy and corporate earnings will recover completely over time.

“I don’t think it’s important for the markets,” Hooper said of Invesco, “but it’s really important for the economy.”

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