January 20, 2021

U.S. Economy Stumbles as the Coronavirus Spreads Widely

Any reversal would be disappointing after months of economic progress. But it would hardly be surprising given the new wave of lockdowns and business restrictions that made further layoffs all but inevitable. In recent weeks, Chicago has imposed a new stay-at-home order, Los Angeles County has suspended outdoor dining and Philadelphia has banned most indoor private gatherings. Several states have ended or restricted indoor dining. And even where officials have enacted no new rules, many consumers are likely to restrict their activity voluntarily to avoid contracting the virus.

“The most obvious culprit for rising claims is the surging pandemic,” said Daniel Zhao, senior economist for the career site Glassdoor. “It seems like it was only a matter of time before it started to show up in the economic data.”

The latest data is not universally bleak. The Commerce Department reported on Wednesday that orders for big-ticket goods like machinery, a measure of business confidence, rose in October. New home sales also jumped, as rock-bottom interest rates continue to lift the housing market. Households have $1 trillion more in savings than before the pandemic, money that could fuel consumer spending when vaccines become widely available and the threat of the virus fades. And the stock market, that highly imperfect barometer of the economy, has set new highs.

But for the people and industries most exposed, the outlook is bleak. In addition to the new round of business restrictions, a new wave of school closings could push parents — and particularly mothers — back out of the work force. A growing number of economists are forecasting a “double-dip” recession, in which economic activity contracts again early next year.

Article source: https://www.nytimes.com/2020/11/25/business/economy/economy-unemployment-benefits-coronavirus.html

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