Economists: Government aid needs to continue

WASHINGTON — As Congress and the White House resume efforts to agree on a new economic aid package, evidence is growing that the U.S. economy is faltering as is concern that the government may not take needed steps to support hiring and growth.

“We’re in a pretty fragile state again,” warned Nancy Vanden Houten, lead economist at Oxford Economics, a consulting firm. “The economy needs another shot in the arm.”

With unemployment at 11.1% and hiring potentially slowing in July, the economy is likely to weaken further without more government aid, economists say. Few agree with White House economic adviser Larry Kudlow’s assertion that the nation is on a V-shaped recovery path, in which the sharp recession that began in February would be followed by a quick rebound.

What’s needed, most economists say, is continued extra aid for tens of millions of unemployed Americans, along with more funding for state and local governments and more grants for struggling small companies, many of which could go out of business.

Yet even with the viral outbreak intensifying and nearly half of Americans whose families have endured a layoff saying they fear those jobs are lost forever, Congress isn’t close to agreeing on the outlines of a package even as a $600-a-week federal payment to the unemployed has expired.

Many small businesses have said the $600 weekly federal benefit has made it harder for them to fill jobs. But some unemployed people are reluctant to return to work because they fear becoming infected. And others have tried and failed to find any work.

In a paper released Monday, a group of economists and doctoral students at Yale University found unemployed people with larger percentage gains in their benefits were no less likely to return to work than those with smaller increases.