US economic recovery in doubt as pandemic drags on

WASHINGTON (AFP) – The United States (US) economy continues to regain ground as the coronavirus crisis drags on, with retailers and manufacturing posting gains, but new data on Friday show progress is slowing and the recovery is in doubt amid a political stalemate over a new aid package.

“We’re coming back very strong. We should have a very good third quarter” and an “unbelievably good” next year, President Donald Trump told reporters on Friday when asked about the industrial production increase in July.

But he remained steadfast in opposing a spending package that would include help for ailing cities and states.

“They want USD1 trillion to go to their friends doing a bad job running certain cities and states that are doing very badly,” Trump said, adding that Democrats are to blame for the impasse.

Economists warn that the massive aid deal approved by Congress in late March, including expanded federal unemployment benefits, has supported the economy in recent weeks but that could change if the expiring programmes are not replaced.

“Our ‘friends’ in Washington seem to be doing everything possible to kill the recovery,” economist Joel Naroff said in an analysis.

He said it was the government’s “welfare programmes that have supported household and business spending. With the Senate on vacation… the funds flowing to unemployed workers and supporting businesses are disappearing.”

US retail sales increased 1.2 per cent last month compared to June, a more modest rise than economists had been expecting, held down by a decline in auto sales, according to government data released on Friday.

A price sign is displayed at a retail store as a store employee wears a mask while working in Niles, Illinois. PHOTO: AP