US econ­omy may be stalling out as vi­ral out­break wors­ens

The Maui News - - News - By CHRISTO­PHER RU­GABER The As­so­ci­ated Press

WASH­ING­TON — The U.S. econ­omy is stum­bling as the vi­ral out­break in­ten­si­fies, threat­en­ing to slow hir­ing and deep­en­ing the un­cer­tainty for em­ploy­ees, con­sumers and com­pa­nies across the coun­try.

Coro­n­avirus case counts are ris­ing in 38 states, and the na­tion as a whole has been shat­ter­ing sin­gle-day records for new con­firmed cases. In six states rep­re­sent­ing one-third of the econ­omy — Ari­zona, Cal­i­for­nia, Colorado, Florida, Michi­gan, and Texas — gov­er­nors are re­vers­ing their re­open­ing plans. Re­open­ing ef­forts are on pause in 15 other states.

The re­ver­sals are keep­ing lay­offs el­e­vated and threat­en­ing to weaken hir­ing. More than 1.3 mil­lion peo­ple ap­plied for un­em­ploy­ment ben­e­fits last week, the La­bor Depart­ment said Thurs­day, down from 1.4 mil­lion the pre­vi­ous week but still roughly dou­ble the pre-pan­demic weekly record. Ap­pli­ca­tions had fallen steadily in April and May but have barely de­clined in the past month.

Job­less claims “are stalled out at a new nor­mal of over a mil­lion new claims ev­ery week,” said Daniel Zhao, an econ­o­mist at Glass­door. “The virus is in the driver’s seat and we’re along for the ride un­til the cur­rent pub­lic health cri­sis is re­solved.”

Some econ­o­mists have even warned that a so-called “dou­ble-dip” re­ces­sion, in which the econ­omy shrinks again af­ter re­bound­ing, could de­velop. Con­sumers, the pri­mary driver of U.S. eco­nomic growth, are pulling back on spend­ing in restau­rants and bars, es­pe­cially in the hard­esthit states. Some small busi­nesses are clos­ing, ei­ther un­der govern­ment or­ders or be­cause of a lack of cus­tomers, ac­cord­ing to pri­vate data.

Sev­eral com­pa­nies have warned in re­cent days that more lay­offs are com­ing. Levi’s, the iconic jeans maker, said it will cut 700 cor­po­rate jobs. United Air­lines has warned 36,000 of its em­ploy­ees that they could lose their jobs in Oc­to­ber. (Air­lines aren’t al­lowed to cut jobs un­til then as a con­di­tion of ac­cept­ing bil­lions of dol­lars in govern­ment res­cue aid.) Mo­tor­cy­cle maker Har­ley Davidson said it will elim­i­nate 700 cor­po­rate jobs.

Wal­greens will cut 4,000 jobs at its phar­macy chain Boots in the United King­dom. Bed Bath & Be­yond said it will close 200 stores over the next two years as its sales have slid.

The to­tal num­ber of peo­ple re­ceiv­ing job­less ben­e­fits fell 700,000 to 18 mil­lion. That sug­gests that some com­pa­nies are con­tin­u­ing to re­hire a lim­ited num­ber of work­ers. An ad­di­tional 1 mil­lion peo­ple sought ben­e­fits last week un­der a sep­a­rate pro­gram for self-em­ployed and gig work­ers that has made them el­i­gi­ble for aid for the first time. These fig­ures aren’t ad­justed for sea­sonal vari­a­tions, so the govern­ment doesn’t in­clude them in the of­fi­cial count.

The re­newed threat of job losses is aris­ing just as a fed­eral pro­gram that pro­vides $600 a week in un­em­ploy­ment ben­e­fits, on top of what­ever job­less aid each state pro­vides, is to ex­pire at the end of this month. Con­gres­sional lead­ers have said they will take up some form of a new res­cue pack­age when law­mak­ers re­turn later this month from a re­cess.

Ad­min­is­tra­tion of­fi­cials have ex­pressed sup­port for ad­di­tional stim­u­lus. But Se­nate Repub­li­cans have op­posed ex­tend­ing the $600 a week in un­em­ploy­ment ben­e­fits, mainly on the ground that it dis­cour­ages laid-off peo­ple from re­turn­ing to work. House Democrats have pushed to ex­tend the $600 a week through Jan­uary.

In an in­ter­view Thurs­day on CNBC, Trea­sury Sec­re­tary Steven Mnuchin sug­gested that the ad­min­is­tra­tion might sup­port an ex­ten­sion of sup­ple­men­tal un­em­ploy­ment aid but at a re­duced level.

“We’re go­ing to make sure peo­ple are (in­cen­tivized) to go back to jobs,” Mnuchin said.

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