THIRD WORLD USA
Roubini lashes out at post-election gridlock: No stimulus means 'lots of people are going to suffer'
Julia La Roche
·Correspondent
Fri, November 6, 2020
Famed economist Nouriel Roubini warned on Friday that legislative gridlock and an inadequate fiscal stimulus package — at a time when coronavirus cases are climbing — may tip the economy into a double-dip recession.
VIDEO https://finance.yahoo.com/news/nouriel-roubini-sees-risk-of-double-dip-recession-223038346.html
As of late Friday, former Vice President Joe Biden appeared increasingly likely to prevail in his quest for the White House, with President Donald Trump lagging in both the popular vote and Electoral College numbers as key states finalize ballot counts. Meanwhile, Republicans appear to have an edge on retaining the Senate majority.
Some on Wall Street have suggested Trump and the Senate GOP could hash out a “lame duck” stimulus before the January inauguration.
However, Roubini suggested the incumbent has “no incentive” to relent on Republican demands for a smaller bill — especially if Biden is formally declared the election’s winner.
“Remember, when [former President Barack] Obama came to power during a severe recession, there was not a single Republican who voted for that stimulus. This time around, the Republicans are going to say, 'We're not going to help Biden. Let the economy rot because we are going to have a chance in 2022,’” the New York University economist told Yahoo Finance in a wide-ranging interview.
Roubini — widely known as “Dr. Doom” for his dark prognostications — cast doubt on prospects for bipartisan accord on a fresh injection of cash for the winded economy. He added that any stimulus would need to be "well-above a trillion to make a difference."
In light of that, “we are going to have gridlock like the past — we're not going to have enough fiscal stimulus, the economy is going to weaken, and that's going to be something that eventually is going to bear negatively on the market," he added.
Market defies uncertainty, but lots will ‘suffer’
As of late Friday, former Vice President Joe Biden appeared increasingly likely to prevail in his quest for the White House, with President Donald Trump lagging in both the popular vote and Electoral College numbers as key states finalize ballot counts. Meanwhile, Republicans appear to have an edge on retaining the Senate majority.
Some on Wall Street have suggested Trump and the Senate GOP could hash out a “lame duck” stimulus before the January inauguration.
However, Roubini suggested the incumbent has “no incentive” to relent on Republican demands for a smaller bill — especially if Biden is formally declared the election’s winner.
“Remember, when [former President Barack] Obama came to power during a severe recession, there was not a single Republican who voted for that stimulus. This time around, the Republicans are going to say, 'We're not going to help Biden. Let the economy rot because we are going to have a chance in 2022,’” the New York University economist told Yahoo Finance in a wide-ranging interview.
Roubini — widely known as “Dr. Doom” for his dark prognostications — cast doubt on prospects for bipartisan accord on a fresh injection of cash for the winded economy. He added that any stimulus would need to be "well-above a trillion to make a difference."
In light of that, “we are going to have gridlock like the past — we're not going to have enough fiscal stimulus, the economy is going to weaken, and that's going to be something that eventually is going to bear negatively on the market," he added.
Market defies uncertainty, but lots will ‘suffer’
The United States Capitol Building at night in Washington DC
As investors began to digest the election, the S&P 500 posted its best week since April, largely because Biden’s narrow Democratic majority means less prospect for major tax hikes and expensive government initiatives, if he’s formally declared the winner.
"In the short-run, of course, this week the stock market rallied because they believe that divided government is good and whey they believe the divided government is good is because Biden wanted to increase taxes,” Roubini said.
Those initiatives include hiking corporate taxes from 21 to 28 percent, closing favorable tax loopholes, and raising taxes on those who make more than $400,000, among other things. Those proposals would be anathema to Congressional Republicans, and would come as the economy suffers the after-effects of the COVID-19 crisis.
As the virus spreads, the prospects for the economy look increasingly dim. Roubini estimated that Europe is already going into a double-dip recession in the fourth quarter, and the first quarter of 2021.
"In the United States, even if you don't have Draconian lockdowns like they're going to have in Europe,” surging infections means people and companies “are more risk-averse, more uncertain, they spend less, they save more,” he said. The uncertainty weighs on employment, personal spending and business investment.
In the U.S., without adequate fiscal stimulus, "that could be bearing negatively on the market over time, not in the short-run, but over time once we realize that we have a ‘V’ that becomes more like a ‘U’ with a risk of a double-dip recession," Roubini added, referencing the pace and scope of a recovery.
For now, his baseline is "mediocre, anemic, subpar, below-trend recovery that means lots of people are going to suffer."
While the October jobs report on Friday showed the economy added 638,000 jobs, and the unemployment rate dropped to 6.9% from 7.9% a month ago, 10 million people are still out of work since the beginning of the pandemic.
To be sure, while the economy has improved, for many Americans, it's "not a good economy," the economist said.
One of the challenges out-of-work Americans might face, according to Roubini, is when companies rehire, rather than bringing back full-time jobs with full wages and benefits. Once they do, they'll likely opt for more part-time, freelancer, contractor, and gig workers, with low wages, he estimates.
"The corporate sector wants to have flexibility. That means that these precarious jobs will become the new norm, leading to economic fragilities, more uncertainty, more income and wealth insecurity,” Roubini said.
As investors began to digest the election, the S&P 500 posted its best week since April, largely because Biden’s narrow Democratic majority means less prospect for major tax hikes and expensive government initiatives, if he’s formally declared the winner.
"In the short-run, of course, this week the stock market rallied because they believe that divided government is good and whey they believe the divided government is good is because Biden wanted to increase taxes,” Roubini said.
Those initiatives include hiking corporate taxes from 21 to 28 percent, closing favorable tax loopholes, and raising taxes on those who make more than $400,000, among other things. Those proposals would be anathema to Congressional Republicans, and would come as the economy suffers the after-effects of the COVID-19 crisis.
As the virus spreads, the prospects for the economy look increasingly dim. Roubini estimated that Europe is already going into a double-dip recession in the fourth quarter, and the first quarter of 2021.
"In the United States, even if you don't have Draconian lockdowns like they're going to have in Europe,” surging infections means people and companies “are more risk-averse, more uncertain, they spend less, they save more,” he said. The uncertainty weighs on employment, personal spending and business investment.
In the U.S., without adequate fiscal stimulus, "that could be bearing negatively on the market over time, not in the short-run, but over time once we realize that we have a ‘V’ that becomes more like a ‘U’ with a risk of a double-dip recession," Roubini added, referencing the pace and scope of a recovery.
For now, his baseline is "mediocre, anemic, subpar, below-trend recovery that means lots of people are going to suffer."
While the October jobs report on Friday showed the economy added 638,000 jobs, and the unemployment rate dropped to 6.9% from 7.9% a month ago, 10 million people are still out of work since the beginning of the pandemic.
To be sure, while the economy has improved, for many Americans, it's "not a good economy," the economist said.
One of the challenges out-of-work Americans might face, according to Roubini, is when companies rehire, rather than bringing back full-time jobs with full wages and benefits. Once they do, they'll likely opt for more part-time, freelancer, contractor, and gig workers, with low wages, he estimates.
"The corporate sector wants to have flexibility. That means that these precarious jobs will become the new norm, leading to economic fragilities, more uncertainty, more income and wealth insecurity,” Roubini said.
Dow Jones Stalls As McConnell Resists Bigger Stimulus
MICHAEL LARKIN
11/06/2020
The Dow Jones Industrial Average rally stalled Friday as Senate Majority Leader Mitch McConnell said stronger-than-expected jobs data justifies a smaller stimulus relief bill. But indexes continued to rise from session lows. Meanwhile, Joe Biden looks on the verge of winning the White House. Leaderboard stock Nvidia (NVDA) passed a buy point.
New Labor Department figures showed the U.S. jobless rate slid by a percentage point to 6.9% in October. The U.S. economy added 638,000 jobs in the month, with private-sector payrolls growing by 906,000. This was better than analysts expected.
"That clearly ought to affect the size of any additional stimulus package we do," McConnell told reporters in Kentucky Friday. Senate Republicans have mooted a $500 billion relief plan.
The Trump administration is also against a bigger stimulus. White House economic advisor Larry Kudlow also said the jobs report is a reason to oppose a bigger coronavirus relief package.
House Democrats had been pushing for a $2.4 trillion package before the election. Negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin repeatedly failed to bear fruit.
MICHAEL LARKIN
11/06/2020
The Dow Jones Industrial Average rally stalled Friday as Senate Majority Leader Mitch McConnell said stronger-than-expected jobs data justifies a smaller stimulus relief bill. But indexes continued to rise from session lows. Meanwhile, Joe Biden looks on the verge of winning the White House. Leaderboard stock Nvidia (NVDA) passed a buy point.
New Labor Department figures showed the U.S. jobless rate slid by a percentage point to 6.9% in October. The U.S. economy added 638,000 jobs in the month, with private-sector payrolls growing by 906,000. This was better than analysts expected.
"That clearly ought to affect the size of any additional stimulus package we do," McConnell told reporters in Kentucky Friday. Senate Republicans have mooted a $500 billion relief plan.
The Trump administration is also against a bigger stimulus. White House economic advisor Larry Kudlow also said the jobs report is a reason to oppose a bigger coronavirus relief package.
House Democrats had been pushing for a $2.4 trillion package before the election. Negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin repeatedly failed to bear fruit.
America’s divisiveness will 'make it a lot harder on the working class': Ian Bremmer
Akiko Fujita
·Anchor/Reporter
Fri, November 6, 2020
Akiko Fujita
·Anchor/Reporter
Fri, November 6, 2020
VIDEO https://finance.yahoo.com/news/americas-divisiveness-will-make-it-a-lot-harder-on-the-working-class-ian-bremmer-143656282.html
The U.S. presidential election exposed deep divisions among voters, on the issues of the economy, coronavirus, and social justice. Now, that division is likely to weigh on the working class, as a new wave of coronavirus cases threatens to slow the economic recovery.
Speaking to Yahoo Finance Live, Eurasia Group founder and President Ian Bremmer said a divided electorate coupled with a divided Congress will make the passage of additional fiscal relief an uphill battle.
“I think it's going to make it a lot harder for the working class for those who have been furloughed and those furloughs are being made permanent, because the amount of stimulus that will be on offer, will be so much less,” he said. “There's the ability to start to bring red and blue together, but that's not what we just saw.”
More than three months after the expiration of federal enhanced unemployment benefits, Congress remains at a stalemate over a coronavirus stimulus package, even as more than 20 million Americans remain unemployed. And recent data suggests the pace of the economic recovery is slowing.
The Labor Department’s monthly jobs report Friday showed, that 638,000 jobs were added in the month of October, down from 661,000 in the previous month. Private payrolls slowed to 365,000 jobs in October, well below the 600,000 estimate.
But reaching a compromise on a larger fiscal stimulus appears unlikely, with an increasingly divided Congress. Democratic lawmakers, who pinned their hopes for a “blue wave” in Tuesday’s election, faced a stunning disappointment, after the party lost more than half a dozen seats in the House of Representatives. They failed to re-take the majority in the Senate.
The results came as the U.S. reported a record 100,000 new coronavirus cases in a single day Thursday, for the first time since the pandemic began.
Bad for a lot of Americans
“In Europe, you have pretty much the same coronavirus crisis. The case levels in hospitalizations are higher right now per capita than the United States. But in Europe, unlike in 2008 or 2010, they are responding to this crisis, collectively,” Bremmer said. “In fact, 27 European countries voted unanimously for a massive relief package that will take money from the wealthy countries and send it to the poorest countries, and that will actually start to address the kind of issues in Europe that... [would help] people that otherwise would be hardest hit by this crisis.”
The U.S. presidential election exposed deep divisions among voters, on the issues of the economy, coronavirus, and social justice. Now, that division is likely to weigh on the working class, as a new wave of coronavirus cases threatens to slow the economic recovery.
Speaking to Yahoo Finance Live, Eurasia Group founder and President Ian Bremmer said a divided electorate coupled with a divided Congress will make the passage of additional fiscal relief an uphill battle.
“I think it's going to make it a lot harder for the working class for those who have been furloughed and those furloughs are being made permanent, because the amount of stimulus that will be on offer, will be so much less,” he said. “There's the ability to start to bring red and blue together, but that's not what we just saw.”
More than three months after the expiration of federal enhanced unemployment benefits, Congress remains at a stalemate over a coronavirus stimulus package, even as more than 20 million Americans remain unemployed. And recent data suggests the pace of the economic recovery is slowing.
The Labor Department’s monthly jobs report Friday showed, that 638,000 jobs were added in the month of October, down from 661,000 in the previous month. Private payrolls slowed to 365,000 jobs in October, well below the 600,000 estimate.
But reaching a compromise on a larger fiscal stimulus appears unlikely, with an increasingly divided Congress. Democratic lawmakers, who pinned their hopes for a “blue wave” in Tuesday’s election, faced a stunning disappointment, after the party lost more than half a dozen seats in the House of Representatives. They failed to re-take the majority in the Senate.
The results came as the U.S. reported a record 100,000 new coronavirus cases in a single day Thursday, for the first time since the pandemic began.
Bad for a lot of Americans
“In Europe, you have pretty much the same coronavirus crisis. The case levels in hospitalizations are higher right now per capita than the United States. But in Europe, unlike in 2008 or 2010, they are responding to this crisis, collectively,” Bremmer said. “In fact, 27 European countries voted unanimously for a massive relief package that will take money from the wealthy countries and send it to the poorest countries, and that will actually start to address the kind of issues in Europe that... [would help] people that otherwise would be hardest hit by this crisis.”
People wait in line at a free COVID-19 testing site provided by United Memorial Medical Center, at the Mexican Consulate, Sunday, June 28, 2020, in Houston. Confirmed cases of the coronavirus in Texas continue to surge. Texas Gov. Greg Abbott, on Friday, shut down bars again and scaled back restaurant dining as cases climbed to record levels after the state embarked on one of America's fastest reopenings. (AP Photo/David J. Phillip)More
The lack of fiscal relief threatens to push millions of Americans into poverty. Still, the U.S. electorate remains fundamentally divided on how to pursue financial and economic reforms and tackle the public health crisis. Exit polls from Tuesday showed the opinions differed right along political fault lines, with 51% of the voters, saying it was more important to contain the coronavirus now, even if it hurts the economy, according to Edison Research for the National Election Pool. Forty-two percent of voters said rebuilding the economy should be a priority, even if it hurts efforts to contain the virus.
“The fact is that 2008 feels quaint,” Bremmer said, referring to the Great Financial Crisis. “It's a memory that feels like it's not just from a different time but from a different country... 2021 I think is going to feel very bad for an awful lot of Americans.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
The lack of fiscal relief threatens to push millions of Americans into poverty. Still, the U.S. electorate remains fundamentally divided on how to pursue financial and economic reforms and tackle the public health crisis. Exit polls from Tuesday showed the opinions differed right along political fault lines, with 51% of the voters, saying it was more important to contain the coronavirus now, even if it hurts the economy, according to Edison Research for the National Election Pool. Forty-two percent of voters said rebuilding the economy should be a priority, even if it hurts efforts to contain the virus.
“The fact is that 2008 feels quaint,” Bremmer said, referring to the Great Financial Crisis. “It's a memory that feels like it's not just from a different time but from a different country... 2021 I think is going to feel very bad for an awful lot of Americans.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
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