This week, President Trump, cornered with an evolving multi-front crisis that reflects on the election polls as a referendum on his presidency (with his approval plummeted to historic lows of 39% ), has tried to make his case turning back to the economy. For a few days, Wall Street has shown gains, including a historical high in the NASDAQ index. There was also a rebound in the jobs markets amidst the recession and historically high unemployment numbers triggered by the mismanagement of the pandemic.
Notwithstanding that Trump is shouting that Wall Street is roaring via Twitter, the stock markets are yet to show a sustainable growth trend. More likely, it will have continuous volatility with opportunity upticks, given the concerns for a second COVID-19 wave, among other economic distortions created by Trumps’s erratic international trade policies and the impact of the fiscal deficit created by the tax cuts he introduced (fiscal deficit grew from 2.8% of GDP in 2015 to 4.8% in 2020). These fiscal constraints make the margin of maneuver and sustainability of economic recovery efforts more difficult.
On the other hand, unemployment remains at record highs for Latino and African Americans, two demographics severely impacted by the coronavirus. To explain this multi-factor situation, one can look into high Latino unemployment as a direct consequence of the mediocre implementation of the CARES Act Paycheck Protection Program (PPP). Indeed, PPP only reached 12% of black and Latino Small Business per research conducted for Unidos US. Given that the majority of Latino Small Businesses have one sole proprietor (or are family-owned) and hire relatives as well as a significant number of Hispanics, the impact of the Trump administration’s failure has lasting and severe adverse consequences for Latinos and the communities served by their small businesses.
Moreover, one critically important factor is the realization that those more exposed and infected by COVID-19 were essential workers, a majority of them Latinos and African-Americans, whose wages and economic security, as well as healthcare protections, are minimal. This vulnerability and inequity exposed by the pandemic have made many, except the Trump administration, realize how much we owe to those who are “essential workers” yet remain underpaid. Instead, the GOP (and President Trump) have pushed back, over the years, against a rise in the federal minimum wage and other safeguards for essential workers. One of the takeaways from this pandemic is the need to design labor laws that truly elevate economic security for crucial workers, which are essentially America’s working class.
Finally, Senate Majority Leader Mitch McConnell has buried the second stimulus packages presented after the CARES Act in his legislation graveyard. Subsequently, making the prospects of the economy uncertain and wholly reliant of near-zero interest rate policy pushed by the FED, a needed but incomplete measure as it mostly benefits those with good credit rating. However, it does not address those under financial stress or minority-owned small businesses, which confront financial inclusion difficulties.