The vaccine news and better-than-expected US job growth in October are “encouraging” developments for the world’s largest economy – but that doesn’t reduce the need for further economic stimulus, said Carl Tannenbaum, economist Chief at Northern Trust.
“On the employment front, we still have 10 million Americans who were working in January and not working today. And those who remain unemployed see a much longer path to full employment, so they will continue to need some support. He told CNBC’s “Squawk Box Asia”.
“And the other thing that I think is a headwind here in the United States … is the states and local governments whose budgets are currently in disarray due to lost revenue, they are laying off, cutting services and it’s bad. for economic activity. ”
This is why the United States cannot depend on a vaccine to “solve all of our problems,” Tannenbaum said. He explained that even though Pfizer and BioNTech’s Covid-19 vaccine is ‘optimistically’ approved this year, there may not be enough doses until 2021 to immunize those in need. .
But the economist said the United States is unlikely to receive an economic relief package until the presidential inauguration in January, given deep divisions in Congress. Negotiations for a stimulus deal came to a standstill ahead of last week’s election, with Democrats and Republicans struggling to agree on the size and scale of a package.
“As a result, I think our recovery here in the United States, which is already losing momentum, could be threatened if we wait for a vaccine to solve all of our problems,” Tannenbaum said.
The business community and other economists have also said the US economy needs additional support as soon as possible.
U.S. Chamber of Commerce CEO Thomas Donohue on Monday called on Congress to pass an additional stimulus ahead of President-elect Joe Biden’s inauguration, saying it will be months before the immediate economic benefits of a vaccine are felt.
– CNBC’s Sam Meredith and Kevin Stankiewicz contributed to this report.