Little leadership coming from White House
WASHINGTON — U.S. consumer confidence plunged in August, falling to its lowest level since 2014, as Americans grew increasingly despondent over declining jobs and poor business conditions.
The Conference Board’s index fell from a revised 91.7 in July to 84.8, the worst level since the pandemic struck the U.S. economy.
“The confidence gauge also remains well below pre-crisis levels, illustrating the depth of the economic hole created by the pandemic, as well as the impact of the surge in infections in June and July,” Olivia Rockeman reported for Bloomberg News.
About 30 million workers were collecting unemployment benefits near the end of July, a number that could grow significantly larger by the end of August. That’s a figure of roughly 1 out of every 5 workers, a staggering statistic by any count, according to economist Ernie Tedeschi at Evercore ISI.
The Labor Department “reported that the total number of people claiming unemployment insurance for the week ending July 4 — without any seasonal adjustment — equaled 31.8 million,” The New York Times reported on July 24.
The Times further noted the Department of Labor categorizes such claims into various batches. “In one are those filed through states’ regular unemployment insurance systems, a number that rose (in late July) for the first time in months.
“A second includes people who filed through the federal government’s temporary Pandemic Unemployment Assistance program, for workers not ordinarily eligible for state benefits.
“A third and growing group includes recipients who exhausted their regular benefits but are eligible for an additional 13 weeks of emergency assistance that Congress passed after the coronavirus outbreak,” the Times reported.
In the past few months, the jobs market “showed surprising gains as businesses reopened and rehired workers,” the Times said. “The overall jobless rate dipped in June to 11.1 percent from a peak of 14.7 percent in April.”
“But troubling weaknesses may be reflected in the weekly tallies of laid-off workers filing new applications,” Tedeschi said. “I’m surprised that the claims numbers haven’t gotten better yet.”
The sharp increase in jobless assistance benefits is the first since the coronavirus pandemic struck the U.S. and ground much of its consumerdriven economy to a halt.
“At this stage, you’re seeing all the wrong elements for recovery,” says Gregory Daco, chief U.S. economist at Oxford Economics. “A deteriorating health situation, a weakening labor market and a softening path for demand.”
The increasingly high rate of new weekly unemployment claims more than four months into the coronavirus pandemic “suggests that the nature of the downturn has changed from early on,” Tedeschi states.
It may mean more businesses are shutting down as customers remain in quarantine in response to a surge in virus cases in many parts of the country—a quarantine made much worse as a result of President Trump’s push to reopen the economy before the pandemic was fully under control.
The U.S. has been through many economic recoveries in its economic history, and has always recovered and grown stronger. It will again this time.
But it’s going to take a major infusion of funds, boosting long-term federal loans through the Paycheck Protection Program, and long-term tax breaks to get businesses and consumers back into the economy.
We beat the Great Depression, the Great Recession and survived two world wars, emerging bigger, stronger and richer than ever. Congress needs to pull itself together and pass a massive recovery program that will put America back on its feet and back to work.
It’s going to take political leadership. Unfortunately, there’s little of that coming from the White House these days.