Ris­ing in­fec­tions threaten to slow eco­nomic re­cov­ery

Chicago Sun-Times - - NATION / WORLD / BSUINESS - BY JOSH BOAK AND CHRISTO­PHER RUGABER

BAL­TI­MORE — Ris­ing coro­n­avirus in­fec­tions across dozens of states are threat­en­ing the U.S. eco­nomic re­cov­ery, forc­ing busi­nesses and con­sumers to freeze spend­ing and keep­ing the un­em­ploy­ment rate stub­bornly high.

The gov­ern­ment re­ported Thurs­day that re­tail sales rose a sharp 7.5% in June, but the pos­i­tive trend was un­der­cut by more re­cent data show­ing that credit card spend­ing has stalled. A sep­a­rate re­port showed that more than a mil­lion Amer­i­cans sought un­em­ploy­ment ben­e­fits last week — a sign that com­pa­nies con­tinue to cut jobs.

Econ­o­mists fear any pos­i­tive mo­men­tum could come to a halt if in­fec­tions and deaths rise and more busi­nesses close.

“Con­di­tions in the la­bor mar­ket re­main weak, and the risk of mount­ing per­ma­nent job losses is high, es­pe­cially if ac­tiv­ity con­tin­ues to be dis­rupted by re­peated virus-re­lated shut­downs,” said Rubeela Fa­rooqi, chief U.S. econ­o­mist at High Fre­quency Eco­nom­ics.

It was the 17th con­sec­u­tive week that job­less claims sur­passed 1 mil­lion. Be­fore the pan­demic, just 200,000 peo­ple sought un­em­ploy­ment as­sis­tance in a typ­i­cal week.

Adding to all this pres­sure are signs that the re­cov­ery in con­sumer spend­ing be­gan to stall at the end of last month, ac­cord­ing to the bank JPMor­gan Chase.

“This is my big­gest night­mare, that we would open and re­close small busi­nesses,” said Sandy Si­gal of New­Mark Mer­rill Com­pa­nies, which op­er­ates a to­tal of 85 out­door life­style cen­ters in Cal­i­for­nia, Colorado and Illi­nois. Sixty of the cen­ters are in Cal­i­for­nia, which has now re­closed gyms and nail salons, among other busi­nesses.

The un­cer­tainty of what comes next is height­ened by the pend­ing ex­pi­ra­tion of many of the gov­ern­ment-sup­port pro­grams that have shored up the fi­nances of both busi­nesses and fam­i­lies.

Meghan Mc­Gowan, 30, lost two jobs when the pan­demic in­ten­si­fied in March, one as a full-time li­brar­ian in Detroit and a sec­ond as a sub­sti­tute in a dif­fer­ent li­brary sys­tem. The loom­ing ex­pi­ra­tion of $600 in ex­tra weekly un­em­ploy­ment is nerve-rack­ing be­cause the hia­tus on her stu­dent loans will end this fall, and she has an auto in­surance bill due.

“Be­fore, when I was work­ing through grad school, I worked in res­tau­rants, so that had al­ways been my backup plan, but that’s not an op­tion now,” she said.

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