In. an extraordinary week, which saw President Donald Trump test positive forCovid-19 and require hospitalisation for treatment, there are further signs that the health of the US economy looks equally uncertain.

Amid heightened election fever and news of the President’s own viral symptoms, last week’s labour market report painted a gloomy picture for the US recovery. Employment growth continued to lose momentum, with overall levels of employment still languishing roughly 10 million below pre-pandemic levels.

Particularly concerning in the figures is the spike in long-term unemployment (those unemployed for a period exceeding 27 weeks) – an upward trend that will have negative consequences for the longer-term prospects of the recovery. Those suffering long-term unemployment tend to lose skills, finding it more difficult tore-enter the labour market and also damaging productivity gains that help to drive GDP growth.

Capital expenditures, meanwhile, remain slow. While not a phenomenon confined to the US, it is one that’s particularly pronounced stateside. Levels of indebtedness over the past decade since the last financial crisis have not helped, with much expenditure in that period going into dividend payments and share buy-backs rather than building capacity. Combined with the longstanding issue of America’s aging infrastructure, the prospects of a strong rebound in the medium to long-term are receding.  

To add fuel to the fire, Jay Powell’s renewed call this week for more fiscal measures to support the Fed’s monetary policy appear to have fallen on deaf ears in the White House. In a series of tweets, President Trump threatened to pull the plug on negotiations for a bipartisan stimulus package before the election. With political deadlock continuing, the prospects of an agreement to help lift theUS economy out of its pandemic malaise are receding. The pace of the US recovery looks set to lag further.  

‍