Pandemic-Weakened U.S. Economy Threatens Trump's Hopes For Reelection

Jul 31, 2020
Originally published on July 31, 2020 6:57 pm
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AILSA CHANG, HOST:

House Speaker Nancy Pelosi likened the coronavirus to a runaway locomotive today, and it threatens to derail President Trump's hopes for a second term. The pandemic has already killed more than 150,000 people in the U.S., and it has triggered the deepest recession in the nation's post-war history. That is not where Trump wanted to be with just over three months to go before the November election. Joining us now to talk about all of this is NPR's Scott Horsley. Hey, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ailsa.

CHANG: So the economy was supposed to be the president's strong suit, right? But this week, we learned the pandemic caused literally the sharpest economic contraction on record during this past spring. How is that playing out politically right now?

HORSLEY: Not well. The GDP numbers for April, May and June were terrible, of course. Tens of millions of people lost their jobs as much of the economy was deliberately shut down. That would be bad enough, but the whole goal of the lockdown was to help us get a handle on the coronavirus.

CHANG: Right.

HORSLEY: And while that did work in some countries, here the virus is still raging out of control. Pelosi noted today it took 100 days for the U.S. to reach its first 1 million infections, 43 days to see the second million, 37 days to hit the 3 million mark, and just 16 more days until 4 million Americans were infected.

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NANCY PELOSI: This is a freight train that is picking up steam. That acceleration is not a good thing.

HORSLEY: Now, on the plus side, there are some indications the surge in infections may be cresting. But there are also worrisome signs that economic activity is slowing down. Some of the states that were hardest hit by the pandemic have reimposed limits on indoor dining and entertainment. And even where there aren't those kinds of restrictions, when consumers hear that people are getting sick, that makes them nervous about going out and spending money. Federal Reserve Chairman Jerome Powell warned this week that could put the brakes on a hope for recovery this summer.

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JEROME POWELL: People aren't going out to restaurants, bars, gas stations, pharmacies and beauty salons. It looks like the data are pointing to a slowing in the pace of the recovery.

HORSLEY: Initial claims for unemployment, which had been trending down, have now started to inch up again. So it looks like the recovery in the job market is stalling. And remember; we still have tens of millions of Americans who are out of work.

CHANG: Right. And these people without jobs, I mean, they're losing the extra $600 a week from the federal government that had been keeping many of them afloat. So what do you think that's going to mean for the economy?

HORSLEY: It could be a real drain. Those supplemental benefits the Congress approved back in March officially expire today. And, of course, there's no agreement yet on a plan to replace them. That spells real trouble for people like Allegra Troiano, who lost her job at a school for international students in Milwaukee. As of this weekend, she's going from receiving $825 a week down to just 225. And she says that's not enough to cover even half of her mortgage.

ALLEGRA TROIANO: None of us asked to be laid off. None of us want to be sitting at home waiting for this pandemic to die down. I love my job, but I don't see it coming back anytime soon.

HORSLEY: And Fed Chairman Powell agrees. He says even in the best case, it's going to take a long time for millions of Americans to go back to work. And in the meantime, he says they're going to need extra help to pay their bills. Otherwise, the economists at Wells Fargo Securities warn you could see another huge drop in consumer spending as early as next week. And, of course, that's not going to do anything to help the recovery.

CHANG: Well, what's been the White House's response so far?

HORSLEY: It seems to be dawning on the president and his team that this could be a problem - 95 days out from the election. Vice president - former Vice President Biden has now overtaken Trump in the polls on handling of the economy. And so after basically sitting on the sidelines for weeks hoping things would turn around, the administration finally started to negotiate with lawmakers. White House Chief of Staff Mark Meadows met last night with Pelosi and the Senate Democratic leader Chuck Schumer. But Meadows came away from that meeting empty-handed.

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MARK MEADOWS: The Democrats believe that they have all the cards on their side. And they're willing to play those cards at the expense of those that are hurting.

HORSLEY: Now, Trump's chief of staff is hoping for some kind of stopgap deal to extend jobless benefits for a week or so. But Pelosi said, no way. She knows Republicans are still arguing among themselves about what they want.

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PELOSI: Let's get real about what - who says what. We passed a bill 10 weeks ago. They couldn't even get a shell bill among their own members. Forget 60 votes. Talk 51 votes.

HORSLEY: So talks are expected to continue into the weekend.

CHANG: That is NPR's Scott Horsley. Thank you, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.