With the increasing number of coronavirus cases in the U.S, followed by persistent layoffs, diminished income and nervous consumers, the U.S economy is under great pressure and faces many threats.
New data released Wednesday showed that the spread of the virus is intensifying the threats to an economy still struggling to recover from the pandemic.
The number of Americans who filed unemployment surged last week for a second straight week to 778,000. This is an increase of 30% from the previous week, evidence that many employers have continued to lay off – more than eight months after the coronavirus outbreak.
The surge in coronavirus cases is heightening pressure on companies and individuals, with growing tension that the economy could suffer a “double-dip” recession as different states and cities reimpose lockdowns.
The total number of people claiming benefits in all programs for the week ending November 7 was 20,452,223.
Economists at JPMorgan Chase forecast a negative 1% annual GDP rate in the first quarter of 2021
“This winter will be grim,” Mark Zandi, chief economist at Moody’s Analytics and his team wrote.
Zandi warned that until the U.S Congress agrees on a new stimulus plan to replace a now-expired multi-trillion-dollar stimulus package enacted earlier in the year, the threat to the economy will grow.
“The economy is going to be very uncomfortable between now and when we get the next fiscal rescue package,” Zandi said. “If lawmakers can’t get it together, it will be very difficult for the economy to avoid going back into a recession.”
An economy can be strong due to two factors – the job market and consumer spending. But these remain especially vulnerable to the spike in coronavirus cases.
79 million Americans currently face food insecurity due to the pandemic.
“Gloomier consumer expectations will weigh on spending as the holidays approach,”Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, cautioned.
Most economists agree that the distribution of an effective vaccine could reinvigorate growth next year. Yet they warn that any sustained recovery will depend on immediate stimulus package from the government to carry the economy through what could be a bleak winter.
“With infections continuing to rise at an elevated pace and curbs on business operations widening, layoffs are likely to pick up over coming weeks,″ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.