FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
November 3, 2020

IN THIS ISSUE:

1. Overview – The Election of a Lifetime Is Here

2. Americans in Poverty Soared by 8 Million Since May

3. Americans Filing For Unemployment Historically High

4. Still Far From the End of the Pandemic Slowdown

5. My Parting Thoughts On the Election

Overview – The Election of a Lifetime Is Here

Well, here we are at last – it’s Election Day. All indications are we’ll see record voter turnout this year. More Americans than ever before are expected to vote in this election. Turnout among younger Americans and first-time voters is expected to be a huge blowout.

The big question is, how will the younger voters lean? My feeling is they will lean strongly to the left. After all, we’ve sent them to liberal-leaning colleges whose professors have indoctrinated them with left-wing ideology. Have you talked with your kids about this?

Debi and I sent our two kids to one of the most conservative colleges we could find and, thankfully, they came to adulthood with a fairly conservative world view, although they aren’t nearly as politically oriented as their Dad (that’s probably a good thing).

I’m not the least bit optimistic about this year’s election. Unlike 2016, I’m not at all confident President Trump will prevail again. Yet regardless who wins the White House, I’m hoping the Republicans can hold onto the Senate. If we can hold the Senate, the GOP should be able to block much of the Biden/Harris ultra-liberal agenda. Let’s hope so anyway.

I will say this: I was not particularly worried when Bill Clinton was elected president in 1993, nor was I overly concerned when Barack Obama was elected in 2009. They were liberals but they were also mainstream politicians in my view. Joe Biden used to be one as well.

But Mr. Biden is no longer a mainstream politician in my opinion. Today he is controlled by the far-left with an ultra-liberal agenda. I fear what they will try to accomplish if he is elected. 

But enough politics for now. Whatever happens, happens tonight or in the next few days. While there is so much more I would like to say, I’m resigned to whatever the outcome is. Let’s move on to other topics today.

Americans in Poverty Soared by 8 Million Since May

The number of Americans in poverty has ballooned by 8 million people since May, researchers at Columbia University reported in October. Researchers from the University of Chicago and Notre Dame found that poverty has grown by six million people in just the past three months alone as the $2 trillion stimulus package, known as the CARES Act, ran out/expired.

Although the federal CARES Act, which gave Americans a one-time stimulus check of $1,200 and unemployed workers an extra $600 per week, was successful at offsetting growing poverty rates in the spring, the effects were short-lived. Aid from the CARES Act ended on July 31.

The exploding poverty rate since then has affected minorities and children the most, the researchers found. The studies come as negotiations for a new coronavirus stimulus package have stalled in Congress and Americans continue to be without relief for the foreseeable future.

A family of four earning $26,200 or less a year is considered living below the poverty line, according to the US Department of Health and Human Services. The total number of people in the US living in poverty is 55 million, including the 8 million who joined their ranks since May, according to the Columbia researchers.

This huge number of Americans living in poverty is expected to continue to rise unless Congress can agree on another large stimulus package, which is not expected until later this year, if at all. And even if lawmakers can agree on a new rescue package after the election, it will be just another short-term economic fix.

Bruce D. Meyer, an economist at the University of Chicago and an author of the above-noted study warned: “These numbers are very concerning. They tell us people are having a lot more trouble paying their bills, paying their rent, putting food on the table.”

The problem is the economy has yet to fully recover from the coronavirus shutdown earlier this year. Yes, many US businesses small and large have reopened since the spring lockdown. That’s the good news. The bad news is, while consumers have started to spend again, demand levels are not back to pre-pandemic levels, and no one is quite sure when they will be.

While lots of businesses have reopened, many employers are not yet confident to rehire all of their former employees. As a result, the unemployment rate has not returned to the 50-year low registered earlier this year. And unfortunately, no one knows when it will, if ever.

Americans Filing For Unemployment Still Historically High

On this note, there is good news and bad. The number of Americans filing initial claims for unemployment insurance fell in late October to the lowest level since the pandemic began, suggesting layoffs are easing, despite the latest upsurge in coronavirus infections.

Initial jobless claims, a proxy for layoffs, fell by 40,000 to 751,000 in the week through October 24, the Labor Department reported last month. That was the lowest level of claims since mid-March, just before the pandemic shut down much business activity throughout the US.

Yet unemployment claims remain exceptionally high by historical standards. The late October new claims were more than three times the weekly average early this year (first two bars in chart), before the pandemic. Initial claims, which reflect the number of people laid off only recently and not those receiving assistance for more than a week, are just one measure of unemployment assistance. In total, more than 20 million Americans are still receiving unemployment benefits through regular state and emergency programs.

Companies big and small continue announcing plans to lay off more workers as the pandemic persists – which suggests the labor market recovery will be protracted.

Many businesses continue to operate below capacity. Many restaurants, for example, have been serving diners only outside or at half-capacity or less indoors to comply with social-distancing rules.

The labor market faces at least two other threats. One is cold weather. Businesses moving indoors during the winter could risk further spread of the virus, which could prompt additional shutdowns.

The second is the expiration of enhanced unemployment benefits that the Trump administration had put in place this summer to boost the amount workers receive for unemployment compensation. When those run out, consumers might cut spending, which could prompt businesses to lay off workers again.

The biggest threat right now is the current rise in infections. The average number of new coronavirus cases reported daily in late October reached a new peak of nearly 69,000. States and cities could impose new restrictions on businesses in response, as European countries have already done. Consumers could also hunker down again, cutting back on travel, eating out and shopping.

Far From the End of the Pandemic Slowdown

Brett Ryan, senior economist at Deutsche Bank, warned: “The easy gains have been had so far. We don’t think that you’re going to see the draconian shutdowns that you had at the beginning of the pandemic. It’s going to be much more localized, but that alone keeps firms cautious.” Meaning he believes we are far from the end of this pandemic slowdown.

More than half the economists responding to a Wall Street Journal survey late last month said they didn’t expect the country to claw back all the jobs lost as a result of coronavirus-related shutdowns until 2023 or later.

The strong job growth over the summer largely reflected businesses such as restaurants and other retail outlets staffing back up quickly after being shut down for weeks. Yet many businesses continue to operate well below capacity.

Finally, failed efforts by Congress and the White House to pass a new federal relief package will likely result in more small business closures and state and local layoffs between now and the end of the year, and into next year.

This means there will continue to be wide swaths of the US economy which simply cannot get back to normal in a worsening pandemic, if it continues. This will be especially bad for travel, leisure, entertainment, restaurants and brick-and-mortar retailing in general.

My Parting Thoughts On the Election

I don’t have a clue who will win this election. Biden has held a comfortable lead in the public polls all year, with the notable exception of Trafalgar, which was the only pollster to get it right in 2016 and is predicting another Trump win this year.

There has been plenty of talk in conservative circles this year that Biden is lacking his mental faculties and has trouble speaking coherently. However, I thought he performed fairly well in the debates – with the exception of his eliminate oil comment at the end of the second debate – and I thought he did OK during the limited times he appeared on the campaign trail.

There has also been a lot of speculation in conservative circles that Mr. Biden will not finish his first term. I see no evidence of that. In fact, if he wins this election, I very much hope he does finish his term. Why? Because Kamala Harris is a left-wing radical, no doubt about it.

While Joe has been pulled farther to the left than he is probably comfortable with, Kamala makes him look like a moderate. She has been rated the “most liberal senator” in Washington by the non-partisan GovTrack.us. We do not want her in the White House!

It remains to be seen if President Trump can pull off another upset. We’ll see. But it looks unlikely we’ll know, one way or the other, by the time we go to bed tonight.

Finally, let’s hope and pray there is not widespread violence once this election is settled, but I’m not optimistic.

Stay safe tonight & this week,

Gary D. Halbert

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