Jim Bianco: Don't Count Out Trump Reelection Just Yet

Don't Count on Economy Roaring Back Quickly

Although Trump apparently sees the economy returning to its pre-pandemic position as a key to his re-election, Bianco predicted that likely won't be happening anytime soon.

The COVID-19 pandemic has forced us to "shut down so much of the economy [and] you've impaired so many people" from their ability to pay "their lease or pay their rent or to get their job back that even if you had the 'magic bullet' [of] a vaccine or a cure … it might not help the economy on the margin," he said.

As just one example, if a restaurant is in a load of debt, "the damage has been done and it can't be undone by a vaccine."

It may also be too late to reverse lifestyle changes that have resulted from the pandemic, he said. For example, he asked whether commuters are going to suddenly hop back on the Long Island Rail Road each day to travel to work in New York City just because there is a vaccine.

People have grown so accustomed to and fond of working from home that they may persuade their companies to let them continue doing that — if not every day, some days, he noted. But even a decline in the percentage of days that people spend at their offices may lead to companies reducing their office space, he said.

"There's going to be some permanent effects" of the pandemic and they are "going to be a drag on the economy," he warned.

Bianco also warned that, although the Federal Reserve's "continuing to print money" is working to stabilize the economy and grow the markets now and that may continue to help the economy as the pandemic continues, "ultimately I don't believe it's going to be good for the long term."

— Check out Powell's Problem? 'He Can't Print Jobs,' Says Fed Watcher on ThinkAdvisor.