While the US Recovery Tracker posted its strongest gain in six weeks, rising 1ppt to 82.1 in the week ended Oct 2, it merely regained its level from two weeks prior. Five of the tracker’s six subcomponents improved, led by strong gains in employment and production. The modest rise in health conditions was an anomaly, as daily Covid-19 infections are rising again. Demand remained hesitant in early October and prone to relapse with colder weather approaching.
With the prospects of an immediate fiscal relief package dimming, the risk is growing that declining income and reduced savings buffers will constrain household spending in coming months, especially among the most vulnerable tranches of the population. The upcoming elections carry upside and downside risks for the economy, but a lapse in income support until 2021 would leave the US consumer quite exposed during the fall and early winter.
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