This has been a worrying week for most people whose livelihoods depend on the state of the U.S. economy. On Wednesday, the number of new coronavirus cases hit almost sixty thousand. The number of deaths, while much lower than at its peak, in April, is now rising in more than twenty states. Without an end in sight to the pandemic, the economic rebound that began in the late spring, after Congress passed the $2.2 trillion cares Act and some of the initial lockdowns were eased, is showing signs of faltering.
On Thursday, the Labor Department announced that new applications for unemployment benefits rose to almost nine hundred thousand last week, the highest level in a month and a half. The jump followed announcements by the Walt Disney Company, Regal Cinemas, and other large companies that they are planning many thousands of new layoffs. Many small businesses, too, are reducing their payrolls or turning temporary layoffs into permanent ones. “Risks to the labor market outlook are weighted heavily to the downside,” Ryan Sweet, an economist at Moody’s Analytics, told Reuters. “The increased spread of the virus across much of the country could result in an even larger pullback in business activity than expected.”
Amid all this gloomy news, at least part of the American economy is doing fine, however. Or, to put it another way, a separate American economy is doing fine: the economy of Wall Street. On Thursday, Morgan Stanley announced that, in the three months from July to September, it reaped $2.7 billion in profits, a rise of twenty-five per cent compared to a year ago. Goldman Sachs, Morgan Stanley’s principal rival, is doing even better. On Wednesday, it announced quarterly profits of $3.62 billion, virtually double what the firm earned in the same quarter in 2019. During a conference call with financial analysts, David Solomon, Goldman’s chief financial officer, attributed the firm’s success to “the strength of our diversified business.” However, Solomon also pointed to a more immediate source of the company’s good fortune. “From a macroeconomic perspective,” he said, “the markets continue to benefit from the unprecedented monetary and fiscal support by central banks and governments globally.”