Viral surge, fiscal fight may sway U.S. voters more than data
By Ann Saphir
(Reuters) - A spike in COVID-19 cases in a number of U.S. states and roller coaster prospects for new Congressional pandemic relief threatens to eclipse the importance of traditional economic data to voters in the Nov. 3 election.
Overall, likely voters continue to say they have more confidence in U.S. President Donald Trump's ability to create jobs than Democratic challenger Joe Biden.
According to the latest Reuters / Ipsos poll https://polling.reuters.com, the former US Vice President leads voters' assessment of each candidate's ability to deal with the pandemic and also leads the race for president / Theme / 2020 election.
Trump, who spent three days in a military hospital last week after being diagnosed with COVID-19, this week cut off talks between the White House and Democratic spokeswoman for the U.S. House of Representatives, Nancy Pelosi, over a new stimulus package.
The president, who will seek re-election in the November 3rd vote, has partially reversed this stance, saying he would support incremental legislation to provide funding for small businesses and airlines and stimulus checks for individuals. On Thursday he said negotiations had resumed.
Trump's Republicans in Congress have opposed the new aid, also out of concerns about increasing the federal government's debt. Pelosi, who has urged Democrats to develop a comprehensive package that includes aid to state and local governments as well as unemployed Americans, signaled on Thursday that a deal had not been made.
Failure to provide additional government incentives would slow economic recovery and hit low-income families and color communities particularly hard, US Federal Reserve Chairman Jerome Powell and several of his colleagues warned this week.
In this "broken view, if you underperform the economy for too long, bad things will happen and potential production will be impacted," said Vincent Reinhart, a former Fed economist who is now chief economist at Mellon.
A ray of hope in economic data this week was a report that showed the US services sector grew faster than expected in September.
But the number of Americans dependent on some form of unemployment insurance remained above 25 million for the week of September 19, and the number of people filing new unemployment benefits remained increased for the week of October 3.
Graphic: Unemployment claims still increased - https://graphics.reuters.com/USA-ELECTION/ECONOMY-JOBLESS/azgponxegvd/chart.png
An even bigger factor for voters could be the surge in COVID-19 infections in Wisconsin and the recent surge in Michigan, two major battlefield states in the presidential election. The infections continue to increase nationwide, as data from Johns Hopkins University show.
The disease caused by the novel coronavirus has killed more than 211,000 people in the United States, according to a Reuters report.
"It remains our forecast that the pace of economic recovery will continue to slow as the virus remains a threat and no additional fiscal stimulus is in place," JP Morgan economist Jesse Edgerton wrote in a note Thursday.
Economists from several Wall Street banks are forecasting some kind of stimulus package regardless of which candidate wins, but say that a Biden presidency, with Democrats also taking control of the U.S. Senate, would likely lead to a bigger one.
Meanwhile, Edgerton noted, "We suspect that if the recent upsurge in virus cases continues, as it did in the summer, consumers and businesses would be largely confused."
(Reporting by Ann Saphir; editing by Paul Simao)
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