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Decisive Week (Semana decisiva) by Isaac Cohen (Opinion)

U.S. Federal Reserve chair Jerome Powell, left, and U.S. Treasury Secretary Steven Mnuchin bump elbows after a hearing of the House of Representatives financial services committee in Washington, D.C., on June 30, 2020. (Tasos Katopodis/Reuters) U.S. Federal Reserve chair Jerome Powell, left, and U.S. Treasury Secretary Steven Mnuchin bump elbows after a hearing of the House of Representatives financial services committee in Washington, D.C., on June 30, 2020. (Tasos Katopodis/Reuters)

The expectation is that all these alarming signals will contribute to persuade the Congress and the White House to come to an agreement, by the end of the week, on a new rescue package, authorizing the continuation of measures to support households, the unemployed and small and big businesses.

WASHINGTON, D.C. July 28, 2020 (By Isaac Cohen*) — Three key announcements are expected this week indicating that the US economy remains besieged by the pandemic shock which started in March.

The creation of 7.5 million new jobs in May and June generated expectations of a vigorous rebound. However, in July, the number of unemployment claims increased again, as several Southern and Western states imposed new restrictions on leisure and hospitality activities, to deal with surges in the spread of the coronavirus.

On Wednesday, the Federal Reserve will conclude two days of meetings and the expectation is that it will announce the continuation of almost zero low interest rates and of several financial assistance programs, started with the sanitary emergency. These include overnight lending, swaps and repurchase agreements, purchases of mortgage backed securities and support for several credit markets, through purchases of corporate bonds, lending to small businesses and purchases of state and municipal debt. https://bit.ly/3gh4Vsu

On Thursday, the Commerce Department will release economic growth figures for the second quarter and the expectation is that they will reveal the steepest contraction in quarterly growth on record. For instance, the last estimate of real economic growth for the second quarter, by the GDPNow model from the Federal Reserve Bank of Atlanta, projects a fall of 34.3 percent. https://bit.ly/2XcDPLn

Finally, the expectation is that all these alarming signals will contribute to persuade the Congress and the White House to come to an agreement, by the end of the week, on a new rescue package, authorizing the continuation of measures to support households, the unemployed and small and big businesses.

SEMANA DECISIVA

WASHINGTON, D.C. Julio 28, 2020 (Por Isaac Cohen*) — Tres anuncios claves son esperados esta semana indicando que la economía de Estados Unidos sigue asediada por el choque pandémico que comenzó en marzo.

La creación de 7.5 millones de nuevos empleos en mayo y junio generó expectativas de una reactivación vigorosa. Sin embargo, en junio, el número de solicitudes de seguro de desempleo aumentó de nevo, ante la imposición en estados del Sur y del Oeste de nuevas restricciones de actividades de entretenimiento y hospitalidad, para lidiar con erupciones en la propagación del virus.

El miércoles, la Reserva Federal concluirá dos días de reuniones y la expectativa es que mantendrá la tasa de interés cercana a cero y anunciará la continuación de varios programas de asistencia financiera, iniciados ante la emergencia sanitaria. Estos incluyen créditos de un día; acuerdos de canje (swaps) y de recompra; compras de activos respaldados por hipotecas y apoyo a varios mercados de crédito, mediante compras de bonos corporativos, préstamos a pequeñas empresas y compras de deuda estatal y municipal. https://bit.ly/3gh4Vsu

El jueves, el Departamento de Comercio divulgará las cifras de crecimiento económico del segundo trimestre y la expectativa es que revelarán la contracción más profunda jamás registrada. Por ejemplo, la última estimación de crecimiento económico real para el segundo trimestre, por el modelo GDPNow del banco de la Reserva Federal de Atlanta, proyecta una caída de 34.3 por ciento. https://bit.ly/2XcDPLn

Por último, la expectativa es que este cúmulo de señales alarmantes contribuirá a persuadir al Congreso y la Casa Blanca que lleguen a un acuerdo, hacia el fin de la semana, sobre un nuevo paquete de rescate, autorizando la continuación de medidas en apoyo de los hogares, los desempleados y las empresas pequeñas y grandes.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, Univision, Telemundo and other media. | Analista y consultor internacional, exdirector de la Oficina de la CEPAL en Washington. Comentarista de economía y finanzas de CNN en Español TV y radio, Univisión, Telemundo y otros medios.