Corporate America says it is ready to work with Biden


Corporate America says it is ready to work with President-elect Joe Biden, hoping for quick action on a new round of COVID-19 relief and infrastructure spending.

FILE PHOTO: A statue of George Washington stands as Federal Hall across Wall Street from the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar

Major business trade groups like the U.S. Chamber of Commerce and Business Roundtable quickly issued congratulating statements to Biden, even though President Donald Trump has refused to concede.

“The first order of business of the new Congress and the new administration is a broad-based infrastructure program” that would include money to ensure high-speed internet access for remote areas, U.S. Chamber of Commerce Chief Policy Officer Neil Bradley told reporters.

Trump often frustrated U.S. business leaders through erratic actions on trade or off-the-cuff calls to boycott or punish a long list of major companies that angered him.

In August, for example, Trump called for a boycott of Goodyear GT.O after the company barred some pro-Trump political attire.

To boost infrastructure spending dramatically, Biden has vowed to raise the U.S. corporate tax rate to 28% from the current 21% and to impose a minimum tax to ensure no U.S. corporation can avoid paying income taxes.

The National Association of Manufacturers said the election results, which included Biden’s win and gains by House Republicans, show “the American people are not interested in extreme policies from either party; they are looking for smart, stable and solutions-oriented governance.”

United Airlines UAL.O Chief Executive Scott Kirby on Monday wrote Biden to congratulate him. "We are ready to work with leaders in Washington in support of our nation, our economy, and our environment."

Executives from major tech firms, including Facebook FB.O, Microsoft MSFT.O, and AMZN.O, also issued statements of support, as did Detroit's Big Three automakers.

“We share your vision of using science to control the virus, widening economic opportunities, achieving racial justice, and combating the climate crisis,” IBM Chief Executive Arvind Krishna wrote to Biden.

Amazon Chief Executive Jeff Bezos wrote via Instagram on Saturday that “Unity, empathy, and decency are not characteristics of a bygone era,” posting a photo of Biden and Vice President-elect Kamala Harris.

The National Mining Association, the trade group for U.S. mining companies, congratulated Biden, saying “working together we can increase the competitiveness of existing industries and reestablish and strengthen our domestic supply chains.”

The U.S. Travel Association praised “President-elect Biden’s objective of helping the industries most heavily impacted by the pandemic. The travel industry accounts for more than a third of overall U.S. unemployment, and policies to promote relief, recovery, and stimulus for travel businesses are integral to a U.S. economic turnaround.”

The stock market surged Monday on promising news that Pfizer's Covid-19 vaccine candidate had proved 90 percent effective in late-stage trials, signaling that some relief is on the horizon for the country's pandemic-stricken economy. But as investors sell off tech stocks for investments in beleaguered leisure or hospitality companies, market strategists and analysts warn that the economy still faces a long path toward recovery.

"The news is encouraging, but it's important to have a little bit of humility," said Ryan Sweet, a senior director of economic research with Moody's Analytics. "I think markets are looking a year ahead from now — if [the vaccine] is widely distributed, the economy will be healing more quickly."

Despite news of a promising vaccine candidate, the U.S. is still on track for a slow and grueling economic recovery, economists said. Moody's still forecasts that the country will not fully recover the 22 million jobs lost to the pandemic until 2024. The economy is still on course to contract by about 2.9 percent this year, according to estimates from Deutsche Bank. Meanwhile, about 13 million consumers reach a financial cliff in December when federal pandemic unemployment benefits expire.

"What we're seeing" in Monday's stock market rally "is a hope that a vaccine will return life to normal enough to favor those industries that have been heavily sold off," said Paul Christopher, head of the global market strategy with the Wells Fargo Investment Institute. "There is a tendency for markets to run with expectations, and those expectations are not met — and the same is true for the vaccine."

An end to the economic turmoil from the virus depends on the delicate distribution of the vaccine, which comes with numerous risks and challenges, Pfizer said. For instance, the vaccine must be stored below 94 degrees Fahrenheit, which requires specially designed refrigerators and vials.

"There is too much risk of extrapolation here," Christopher said. "We prefer investors not drop all their chips in a market that might show some disappointment in the coming weeks and months."

While the country is not out of the woods, the prospect of a vaccine does signal a faster recovery than analysts had predicted, said Binky Chadha, chief U.S. equity and global strategist at Deutsche Bank Securities. That bodes well for industries that depend on in-person services, such as the leisure and hospitality industries, which lost 7.7 million jobs at the height of the pandemic. Retail lost about 1.9 million jobs to temporary or permanent layoffs at the beginning of the pandemic.

"Our view is that the cyclical sector — financials, construction, retail — should farewell, and that is simply because growth has been stronger than expected," Chadha said. "The vaccine will help with that."

As jobs rebound, consumers are likely to follow as people go back to dining out and shopping at malls, said Michael Arone, managing director of State Street Global Advisors. About half of the consumers surveyed by Bain & Co. in October said they had not been to a mall since the beginning of the pandemic. One-third of them said they are not comfortable shopping in malls or stores, and most are not comfortable with air travel.

"As more jobs are added, consumer confidence increases and consumer spending increases," Arone said. "That will be important to follow through on the economy."

However, even when the economy does start to shows signs of recovery, it will still be weaker than it was before the pandemic.

The possible vaccine "is a giant first step in developing a health solution to what is a health problem," Arone said. "What is ultimately going to be the most important is the follow-through on the market and vaccine and consumer behavior. Those are key milestones to keep an eye on moving forward."

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