Scalia Says Covid Economic Recovery Better Than Projected
(Bloomberg) -- U.S. Labor Secretary Eugene Scalia said the economic recovery from the coronavirus pandemic has been better than expected so far, and it won’t be necessary to extend an emergency unemployment program that ends this month.
“We are doing well, we do need to be careful about the virus but I am just optimistic,” Scalia said in an interview on “Fox News Sunday.” “It’s really important to again remember how much better than projected we’ve done so far.”
“Spending, retail spending, consumer spending generally, new home starts, all of these have been actually very encouraging economic indicators over the last about six weeks or so,” Scalia said.
But recent better-than-expected economic data have been a result of businesses rapidly reopening, and that could reverse now that the pandemic is raging in certain parts of the country, according to Moody’s Analytics’ chief economist Mark Zandi.
Going forward, jobs data are likely going to look worse as businesses and consumers pull back in states where the number of virus cases are rising, he said. Policy makers need to act quickly to ensure the economic recovery stays on track, Zandi said.
“The economy needs a lot of help,” Zandi said on CBS News’s “Face the Nation.” “State and local governments are hemorrhaging red ink,” which threatens middle-class jobs should there be large layoffs.
His caution echoed that of economists at Goldman Sachs Group Inc., who on Sunday revised down their GDP estimate for the current quarter as a result of the start-stop nature of re-openings in some states, before conditions get back on track in September.
As lawmakers prepare to resume talks about another round of stimulus later this month, President Donald Trump’s calls for tax relief -- including a potential payroll tax cut -- could be “an important part” of bringing more people back to work, said Scalia, a member of the White House coronavirus task force.
But the $600 weekly unemployment benefit established as part of the first round of stimulus shouldn’t be part of the next package, Scalia said.
More Talks Ahead
“As we reopen the economy I don’t know that we need a benefit like that,” Scalia said. There will likely be a “lot of discussions toward the end of the month” between the White House and lawmakers about the next round of stimulus measures, he said.
Republicans have called the additional unemployment payment, put into place when workers were being urged to stay home to “flatten the curve” of coronavirus cases, a disincentive for some Americans to return to work.
Democrats have proposed legislation to extend the benefit and to phase it out only when unemployment falls below certain levels. At the same time, Trump has called for a payroll tax cut, which would give employees a boost. Talks on Capitol Hill over the next stimulus bill are poised to resume when lawmakers return from the July 4 holiday later this month.
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