The Morning Call

Economy may be stalling as viral outbreak worsens

Americans see threat of job losses — and surge in virus cases

- By Christophe­r Rugaber

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 doubledip 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 hardest-hit 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 — nearly half its workforce — that they could lose their jobs in October. Motorcycle maker Harley Davidson said it will eliminate 700 corporate jobs.

With reported viral cases surging, restaurant visits are falling in Arizona, California, Florida and Texas, which together account for half of new confirmed infections. This week, in Arizona, restaurant traffic was down 65% from a year earlier, worse than the 50% year-over-year drop two weeks earlier, according to data from reservatio­n app OpenTable. In Florida, traffic was down 57%, compared with 45% two weeks before.

Last week, applicatio­ns for U.S. unemployme­nt benefits spiked in Louisiana, Nevada, Tennessee and Texas — states where confirmed cases of the virus are intensifyi­ng. They also jumped in New Jersey and New York, where the pandemic is mostly under control, but where reopening steps have been postponed.

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 selfemploy­ed 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.

Signs of a weakening jobs picture suggest a turnaround from last week’s jobs report for

June, which showed a solid gain of 4.8 million jobs and an unemployme­nt rate that fell to 11.1% from 13.3%. But the June jobs report reflected surveys of Americans that were conducted in the middle of that month — before the pandemic flared up again. And even counting that hiring gain, the economy has regained only about one-third of the jobs that vanished in March and April.

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 laidoff 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.

 ?? SUE OGROCKI/AP ?? More than 1.3 million people applied for jobless benefits last week. Above, people wait at the Oklahoma Employment Security Commission about claims Thursday in Midwest City.
SUE OGROCKI/AP More than 1.3 million people applied for jobless benefits last week. Above, people wait at the Oklahoma Employment Security Commission about claims Thursday in Midwest City.

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