Why Trump’s Reopening Won’t Save the Economy

  • Trump said the economy was taking off like a rocket ship.
  • But the rich are still spending much less than they did before the pandemic, which is destroying jobs.
  • Americans likely won’t feel safe again until a vaccine is available.

President Donald Trump decided to reopen the U.S. economy even if the pandemic wasn’t under control.

While we saw an improvement in job numbers and retail sales, the economy is still damaged from the pandemic. It will take a long time to go back to normal.

Trump Is Too Optimistic

After the government released a better-than-expected jobs report for May, Trump gave a triumphant press conference where he said the economy was taking off quickly:

We’ve been talking about the V. This is better than a V. This is a rocket ship.

Trump is way too optimistic about the reopening. Unfortunately, his plan won’t save the U.S. economy,

Even as states reopen their economies, spending and employment remain well below pre-crisis levels. This suggests that the economy will be slow to rebound until the virus is under control.

Billionaire investor Bill Ackman said recently he thought the economy would start to recover by the end of the year but won’t return to anything close to normal until the second half of 2021. If there is an early, distributable vaccine by the fall, it will make a huge difference.

Ackman said that Trump’s reopening is “sloppy”:

We’ve had kind of sloppy closure of the country for the virus, and we’re having a bit of a sloppy opening. You’re not going to have business confidence return and consumer confidence return until people feel truly safe.

The Rich Don’t Spend Enough

A study by economists from Harvard University found that the vast majority of lower consumer spending in the United States is due to lower spending by high-income households.

While consumer spending rose after Americans received stimulus payments, high-income spending is still 17% lower than pre-pandemic levels….

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