House of Representatives agrees to President Trump’s proposal to increase aid to Americans; US dollar index down 0.34%; US economic data is improving.
The U.S. House of Representatives has voted to support President Trump’s proposal to provide more stimulus payments to needy Americans, a point of contention between the two parties recently. Now the decision is in the hands of the Republican-controlled Senate, which is in danger of losing its majority in the upcoming Georgia Senate elections.
“To reject it would be to deny the economic problems people are facing and again deny them the relief they need,” House Speaker Nancy Pelosi said.
Georgians will decide next week whether to favor Republicans Kelly Loeffler and David Perdue to hold state Senate seats or instead support Democrats Raphael Warnock and Jon Ossoff, which would give the Democratic Party control of the House, Senate and the presidency for the first time. since 2011.
The race is very close, although betting on a Republican win seems safer at this point. President Trump is set to campaign on the eve of the election.
If Senate Majority Leader Mitch McConnell decides to hold a vote on the stimulus bill, he risks not getting enough votes to provide another stimulus, jeopardizing the Republican campaign in Georgia. It’s also a big dilemma for a party that usually champions fiscal conservatism, especially when the current situation calls for flexibility.
McConnell has yet to comment on the House decision, though an ongoing effort to force a vote by Vermont Sen. Bernie Sanders could be successful in forcing him and his colleagues to take a stand.
Even amid the current vaccination campaign, the coronavirus crisis continues to progress in the United States. So far, 19,781,718 cases have been reported, as well as 343,182 deaths, making the United States the most affected country in the world. Nearly 2 million Americans have already been vaccinated, below the government’s goal of vaccinating 20 million by the end of the year.
No relevant data on the state of the US economy has been released so far this week, mainly due to the end-of-year holidays.
Last week, third-quarter annualized gross domestic product was posted at 33.4 percent, after coming in at 33.1 percent in the previous reading. This is a significant improvement over last quarter’s figure of -31.4 percent.
The US Census Bureau reported that orders for durable goods rose 0.9 percent, more than expected, though less than October’s 1.8 percent. Orders for non-defense capital goods rose 0.4 percent, less than expected and below October’s 1.6 percent.
The U.S. dollar index, which measures the greenback’s performance against a basket of its major rivals, fell 0.34 percent, giving up the previous week’s gains.
The House decision has added to the uncertainty over the future of the Republican-controlled Senate as the Georgia runoff approaches. The fact that the US is increasing its deficit strengthens the case for continued dollar weakness.
“We see the dollar’s depreciation continuing into 2021,” said a team of Goldman Sachs strategists. “Liquidity dynamics and the flow of virus news may affect the timing of dollar weakness, but not necessarily the medium-term downtrend.”
The dollar has been losing steam in recent months. The dollar is down 2 percent so far this month, posting a second straight month of losses after falling 2.31 percent in November.
US economic data has improved slightly since our last report.
Quarterly gross domestic product was recently revised upward, higher than expected, to 33.4 percent, according to data released by the Commerce Department. Consumer spending appears to have led the recovery in the third quarter, although there are already signs it will cool as retail sales fell in October and November.
The consumer price index data was essentially unchanged since our last report, signaling an improvement in the monetary area. Likewise, unemployment data signal an improvement in the labor market.
This week is New Year’s Eve, so not much relevant data on the state of the US economy is expected to be released.
The October S&P/Case-Shiller home price index will be released on Tuesday.
Pending home sales data for November will be released on Wednesday.
The US Department of Labor will release jobless claims data on Thursday.