Rising coronavirus infections threaten US economic recovery
BALTIMORE — Rising coronavirus infections across dozens of states are threatening the U.S. economic recovery, forcing businesses and consumers to freeze spending and keeping the unemployment rate stubbornly high.
The government reported Thursday that retail sales rose a sharp 7.5 percent in June, but the positive trend was undercut by more recent data showing that credit card spending has stalled.
A separate report showed that more than a million Americans sought unemployment benefits last week — a sign that companies continue to cut jobs as the virus slashes through the heavily populated Sunbelt.
Economists fear that any positive momentum could come to a halt later this summer if infections and deaths rise and more businesses close.
“Conditions in the labor market remain weak and the risk of mounting permanent job losses is high, especially if activity continues to be disrupted by repeated virus-related shutdowns,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
It was the 17th consecutive week that jobless claims surpassed 1 million. Prior to the pandemic, just 200,000 people sought unemployment assistance in a typical week.
The Labor Department data emerged as the nation saw more troubling infections. Florida reported a single-day record of 156 deaths, along with nearly 14,000 new cases, mirroring a broader trend this week that has seen the national death rate spike. The seven-day rolling average for new deaths has risen to 730, a more than 21 percent increase from a week ago.
Infections are now climbing in 40 states, and 22 states have either paused or reversed efforts to reopen their economies, according to Bank of America.
Businesses and consumers alike are adjusting to the perpetual risk of outbreaks.
Cash payments are out. Deliveries are in. Skeleton crews are keeping retailers afloat. It’s a moment of both caution and innovation that will likely produce lasting changes in how Americans spend.
Business as usual may never return because the steps to improve safety also enable companies to streamline and operate with fewer workers.
