Just days before the 2020 US election, President Trump is campaigning for record economic growth to convince voters to stick with him. However, Democratic rival Joe Biden says the US is "in a deep hole" and that the recovery is in danger of stalling.
Who is right? The presidential candidates have starkly contrasting views on the economy, but both are telling one version of the truth.
See:MarketWatch Coronavirus Recovery Tracker
While the economy has recovered from the coronavirus pandemic faster than expected, the nation remains in a deep recession after most of the measures taken. In addition, the record increase in new coronavirus cases every day in October threatens to prevent a recovery that has already lost momentum.
"The economy is getting better, but the rate at which it is getting better has slowed down in recent weeks," said Richard Moody, chief economist of Regions Financial. "The question is whether and to what extent it will slow down."
Here's a look at the pillars of the economy as voters prepare to pick the next White House resident.
The economy came back to life after government bans on businesses ended in May. Gross domestic product – the value of all goods and services produced in the economy – rose to a record 33.1% per year in July, August and September.
"Biggest and best in our country's history and not even close," tweeted Trump. "Next year will be fantastic !!!"
Read:GDP rises to 33.1%, but the coronavirus resurgence poses a new threat
What the president, of course, left out is that the economy contracted at a record rate of 31.4% a year in the second quarter when the pandemic hit the country. Even after the upturn in the third quarter, the economy is still 3.5% smaller than at the end of 2019.
"It doesn't sound like much, but in a $ 20 trillion economy, it's a huge void," Moody said.
Read:A record 33% increase in GDP still leaves the US economy in a world of hurt
Indeed. Nearly $ 700 billion in economic activity – the equivalent of US spending on the military – has basically disappeared.
The economy also began to slow down towards the end of the third quarter. Forecasters surveyed by MarketWatch forecast that GDP will only grow 3.2% annually for the last three months of 2020.
JOBS AND HIRE
Many Americans returned to work as of May, and the US has regained more than 11 million jobs since the recovery began. Still, about half of the 22 million Americans laid off at the start of the crisis remain unemployed.
What's worse, new hires have fallen sharply. The number of jobs added in October is likely to slow to perhaps 500,000 or less for the fourth straight month. At this rate, it could take the economy a year or more to regain all of the jobs created by the pandemic. And maybe longer.
The unemployment rate rose to a modern record of 14.7% in April – and was unofficially much higher. Although it has fallen rapidly since the spring to 7.9% in September, the unemployment rate is still more than double what it was before the crisis.
In contrast, unemployment had fallen to a 50-year low of 3.5% just before the coronavirus pandemic brought the economy to a standstill.
Here's an even worse statistic: In early October, 22.6 million people were receiving unemployment benefits, based on data from government employment offices. And more than 1 million people make new claims for benefits every week.
Before the crisis, new jobless claims were being made in the low 200,000 a week and fewer than 2 million people were receiving benefits each week.
Read:Unemployment claims in the US drop by 40,000 to 751,000 and hit a new pandemic low
Americans quickly increased their spending once the lockdowns ended and they became more confident in the economy. Retail sales are actually higher now than they were before the pandemic, a surprising turnaround supported by massive government aid to families, the unemployed and small business employees.
Overall, however, consumer spending is still 2% below its pre-pandemic peak and most state aid expired in July. Many economists fear consumers will decline even further if the record spike in coronavirus cases triggers new restrictions, especially if there is no further government support.
The slowdown in hiring could also weigh on consumer spending in the coming months.
The private sector economy has seen a yawning gap in the recovery rate.
Manufacturers are leading, producing almost as many goods as they were before the pandemic. Their biggest problem was on the export side, as so many other countries recovered more slowly than the US.
Companies have also increased their investments again, which indicates a growing confidence in the economy. A key corporate investment metric known as core capital orders rose 4.5% in the twelve months to September. This is the fastest increase in a year and a half.
The situation is different for service-oriented companies that now dominate the American economy.
Some companies in areas like high tech – think Amazon
– how bandits made out. Technology stocks have risen, taking the US stock market with it.
Travel, tourism, hospitality, and entertainment, however, have suffered greatly in an era of social distancing and customer constraints.
Many icons of business such as Disney
, American Airlines
and MGM Resorts
recently announced wide layoffs – and more bad news could come as the pandemic worsens.
See also: "It's now a full blown depression for domestic workers." Nannies, house cleaners and domestic servants struggle as other professions regain their feet