US economy may be stalling out as viral outbreak worsens
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 hardest-hit states. Some small businesses are closing, either under government orders or because of a lack of customers, according to private data.