ECON PLAGUED
Raging virus spurs unemployment & pain
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 onethird 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.
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. (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.
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% yearover-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 Texas, Nevada, Tennessee and Louisiana — 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 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.
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.