By Isaac Cohen*
Three key announcements are expected this week indicating that the US economy remains besieged by the pandemic shock which started in March.
The creation of 7.5 million new jobs in May and June generated expectations of a vigorous rebound. However, in July, the number of unemployment claims increased again, as several Southern and Western states imposed new restrictions on leisure and hospitality activities, to deal with surges in the spread of the corona virus.
On Wednesday, the Federal Reserve will conclude two days of meetings and the expectation is that it will announce the continuation of almost zero low interest rates and of several financial assistance programs, started with the sanitary emergency. These include overnight lending, swaps and repurchase agreements, purchases of mortgage backed securities and support for several credit markets, through purchases of corporate bonds, lending to small businesses and purchases of state and municipal debt. https://www.federalreserve.gov/newsevents/pressreleases/monetary20200728a.htm
On Thursday, the Commerce Department will release economic growth figures for the second quarter and the expectation is that they will reveal the steepest contraction in quarterly growth on record. For instance, the last estimate of real economic growth for the second quarter, by the GDPNow model from the Federal Reserve Bank of Atlanta, projects a fall of 34.3 percent.
Finally, the expectation is that all these alarming signals will contribute to persuade the Congress and the White House to come to an agreement, by the end of the week, on a new rescue package, authorizing the continuation of measures to support households, the unemployed and small and big businesses.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, TELEMUNDO and UNVISION and other media.
