There are two titanic battles underway in America. The first is between Donald Trump and Joe Biden. Trump is incessantly before the public in person or as tweeter-in chief, often to his disadvantage. Biden, his phantom opponent, is ensconced in his basement, communicating through ghost tweeters and releasing occasional set-piece videos.
In 1946, heavyweight champion Joe Lewis was asked how he planned to cope with the quicker, elusive challenger, Billy Conn, in their return match. “He can run, but he can’t hide,” replied the never-garrulous Lewis, who went on to repeat his 1941 knockout victory. Trump is hoping the reverse is true of Biden, that he can hide but he can’t run a campaign that includes free-wheeling press conferences in which his inevitable gaffes would raise questions about his competence and mental acuity.
So far, Biden’s strategy is working. He has an almost nine-point lead in the average of national polls, as did Hillary Clinton in 2016 claims Trump. Biden is also ahead of, or tied with Trump in battleground states, including Texas, which last went Democratic 44 years ago (Jimmy Carter).
The second battle is between the economy and Covid-19. That the economy has great underlying strength is beyond question. After a three-month slump, sales of existing homes rose 20.7% in June, the largest one-month increase ever recorded. That remains 11.3% below the June 2019 level, but property agents attribute that less to a lack of demand than to the difficulty of showing homes and to the scarcity of homes for sale – the inventory of such homes is 18% below last year. Homes are sold within 24 days of listing, compared with 27 days in 2019. And the average sale price of $295,300 is an all-time high.
Sales of new homes also soared, up 13.8% in June. “The housing market is hot, red hot,” says Lawrence Yun, chief economist at the National Association of Realtors. Little wonder that homebuilder confidence is now back to levels reached at the peak of the building boom in 2006. They see no reason why the home market should cool. Consumers are fleeing from cities to the suburbs in search of back yards for the kids, extra space from which to work at home, and in the case of new homes up-to-date technologies to accommodate the shift from office to home and the variety of new entertainment sources available.
In May and June employers hired some 7.5 million workers, the largest two-month total since 1939, when records were first kept, reports the Labor Department, and last week job postings exceeded seven million for the first time since April according to ZipRecruiter. Short of replacing all the jobs lost, but signs that there is life in the economy.
Industrial production is also recovering, up 5.4% in June. And retail sales are showing signs of life, up 18.2% in May and another 7.5% in June in response to re-openings. Under ordinary circumstances sales would continue rising as consumers furnish and spiff up their newly purchased homes, and draw on the savings accumulated when shops and cinemas were closed, vacations impossible, and relief dollars pouring in.
Peter Ganong and his colleagues at the University of Chicago estimate that two-thirds of workers eligible for unemployment insurance are receiving the $600 weekly supplement to state payments and “can receive benefits that exceed lost earnings.” Little wonder that economists at JPMorgan Chase find that spending by the unemployed rose 10% during the early months of the pandemic while spending by those who have not lost their jobs but are fearful of what the future holds declined by 10%.
Unfortunately both for Americans and for the President’s re-election prospects, the seemingly irresistible rise of an economy re-opening after lockdown has proved resistible after all. Covid-19 re-emerged as younger men and women swarmed bars and restaurants, joined protest marches, and generally ignored social distancing rules. They also took a cue from their President and ignored advice to wear face masks, which do inhibit expanding the circle of one’s acquaintances at dating venues. The results have been a resurgence of cases in California, Arizona, Texas, Florida and other states, and a closing of bars and other places in which the heedless congregate.
The National Restaurant Association estimates that 30,000 of the nation’s one million restaurants are already permanently closed, and that 110,000 might join that sad company within a month. Whether that is bail-out seeking or a cold-blooded appraisal of the outlook is difficult to say. But it does seem certain that many small, independent eateries and bars, which like other small businesses generally have only one-month of cash in the bank, will disappear.
The outbreak is concentrated among people with pre-existing vulnerabilities and younger people, many of the latter unaware they are infected or exhibiting only mild flu-like symptoms. Hospital systems in some states are strained, either because of a shortage of capacity or of trained personnel. The difficult-to-compute fatality rate of between 0.5% and 1% (5-10 deaths per thousand people infected according to most studies)– the CDC puts it at 0.65% — is above that of seasonal flu but below that of Ebola “and other infectious diseases that have emerged in recent years,” according to The Wall Street Journal.
Trump, abandoning the rather exuberant optimism for which he has been roundly criticized, now concedes that the surge in infections is likely to get worse before it gets better. That has the economy reeling on the ropes, if not flat on its back as was the elusive Mr. Conn. Which would give this round in the battle to the virus, ahead on most judges’ scorecards, even though a return to complete lock-downs is not on the cards. Bad news for the economy includes:
- New claims for unemployment insurance rose in mid-July, the first increase in new claims on a week-over-week basis since March. At least 4 million fewer people were employed in the middle of this month than at its start.
- Banks, their CEOs taking an increasingly dim view of the ability of businesses and credit-card holders to weather the storm, have increased reserves against loan losses.
- Many businesses are settling in for a multi-year slog with no clear view of how to reshape their business firms for a future that may or may not be virus-free.
- Forecasters are no longer expecting the unemployment rate to dip into single digits by year-end.
All of which, to return to the battle between Trump and Biden, is bad news for the President. Trump has a large stake in going into the election with a growing economy that allows him to say, “I built the greatest economy the world has ever seen before Wuhan came along, and I can do it again.” He is receiving no help from his senate colleagues, who can’t agree on a package to replace the one that expires at the end of this month, except that it must be smaller than it one it replaces. This comes despite warnings from many economists that with tens of millions unemployed, and mortgage deferrals and relief about to expire, now is not the time for an outbreak of the fiscal prudence they long ago abandoned as they mindlessly poured red ink over the nation’s ledgers.
Biden and the Democrats have an equally large stake in going into November with a flailing economy, which they blame on Trump’s failure to react soon enough and strongly enough to the Covid-19. The media, virulently anti-Trump, has a large stake in ensuring that the Democrats’ narrative dominates the campaign, and are willing to do (almost?) whatever it takes to see Trump removed from the White House and installed in a jail cell for some crime(s) for which he cannot pardon himself.
The good news for the President is that the nation is receiving a morale boost: major league baseball and NBA basketball have returned, and the Indy 500 auto race will do so next month before a live but size-limited audience. Oh yes, and the news on the vaccine front continues to brighten.