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A28 us news
Diahuebs 26 November 2020

Picture of US economy is worrisome as virus inflicts damage

(AP) — Gripped by the worsen the health crisis.
accelerating viral out- Meanwhile, another eco-
break, the U.S. economy is nomic threat looms: The im-
under pressure from per- pending expiration of the two
sistent layoffs, diminished supplemental federal unem-
income and nervous con- ployment programs the day
sumers, whose spending is after Christmas could end
needed to drive a recovery benefits completely for 9.1
from the pandemic. million jobless people. Con-
gress has failed for months
A flurry of data released to agree on any new stimu-
Wednesday suggested that the lus aid for jobless individuals
spread of the virus is intensi- and struggling businesses af-
fying the threats to an econo- ter the expiration of a multi-
my still struggling to recover trillion dollar rescue package
from the deep recession that it enacted in March.
struck in early spring. The expiration of benefits
The number of Americans will make it harder for the
seeking unemployment aid unemployed to make rent
rose last week for a second payments, afford food or
straight week to 778,000, evi- keep up with utility bills.
dence that many employers Most economists agree that
are still slashing jobs more because unemployed people
than eight months after the tend to quickly spend their
virus hit. Before the pan- benefits, such aid is effective
demic, weekly jobless claims in boosting the economy.
typically amounted to only When the viral outbreak
about 225,000. Layoffs are struck in early spring, em-
still historically high, with Chase have slashed their spurred demand and made pandemic. For the week of ployers slashed 22 million
many businesses unable to forecast for the first quar- the housing market a rare Nov. 7, the number of people jobs in March and April,
fully reopen and some, es- ter to a negative 1% annual economic bright spot. collecting benefits under the sending the unemployment
pecially restaurants and bars, GDP rate. “This winter will But at the heart of the econ- Pandemic Unemployment rate rocketing to 14.7%, the
facing tightened restrictions. be grim,” they wrote in a re- omy are the job market and Assistance program — which highest rate since the Great
Consumers increased their search note. consumer spending, which offers coverage to gig workers Depression. Since then, the
spending last month by just Zandi warned that until remain especially vulnerable and others who don't qualify economy has regained more
0.5%, the weakest rise since Congress agrees on a new to the spike in virus cases. for traditional aid — rose by than 12 million jobs. Yet the
the pandemic erupted. The stimulus plan to replace a Most economists say the 466,000 to 9.1 million. nation still has about 10 mil-
tepid figure suggested that on now-expired multi-trillion- distribution of an effective And the number of people lion fewer jobs than it did be-
the eve of the crucial holiday dollar aid package enacted in vaccine would likely rein- receiving aid under the Pan- fore the pandemic erupted.
shopping season, Americans the spring, the threat to the vigorate growth next year. Yet demic Emergency Unem- All of which has left many
remain anxious with the vi- economy will grow. they warn that any sustained ployment Compensation Americans anxious and un-
rus spreading and Congress “The economy is going to be recovery will also hinge on program — which offers 13 certain. The Conference
failing to enact any further very uncomfortable between whether Congress can agree weeks of federal benefits to Board, a business research
aid for struggling individuals, now and when we get the soon on a sizable aid package those who have exhausted group, reported Tuesday that
businesses, cities and states. next fiscal rescue package,” to carry the economy through state jobless aid — rose by consumer confidence weak-
At the same time, the govern- Zandi said. “If lawmakers what could be a bleak winter. 132,000 to 4.5 million. ened in November, pulled
ment said can’t get it together, it will be “With infections continuing The data firm Womply says down by lowered expecta-
Wednesday that income, very difficult for the econo- to rise at an elevated pace and that 21% of small businesses tions for the next six months.
which provides the fuel for my to avoid going back into curbs on business operations were shuttered at the start of And the University of Michi-
consumer spending, fell 0.7% a recession.” widening, layoffs are likely to this month, reflecting a steady gan’s Surveys of Consum-
in October. Some corners of the econo- pick up over coming weeks,″ increase from June’s 16% ers reported Wednesday that
The spike in virus cases is my still show strength, or at said Rubeela Farooqi, chief rate. Consumer spending at sentiment declined slightly
heightening pressure on least resilience. Manufactur- U.S. economist at High Fre- local businesses is down 27% this month, and remained
companies and individu- ing is one. The government quency Economics. this month from a year ago, far below where it was be-
als, with fear growing that said Wednesday that orders The government said he to- marking a deterioration from fore the pandemic struck.
the economy could suffer for durable goods rose 1.3% tal number of people who are a 20% year-over-year drop in With the resurgence of the
a “double-dip” recession as in October, a sign that pur- continuing to receive tradi- October, Womply found. virus depressing the outlook
states and cities reimpose chases of goods remain solid tional state unemployment The heart of the problem is of consumers, the sentiment
curbs on businesses. The even while the economy's benefits dropped to 6.1 mil- an untamed virus: The num- index fell to its lowest point
economy, as measured by the much larger service sector — lion from 6.4 million the pre- ber of confirmed infections since August.
gross domestic product, is everything from restaurants, vious week. That figure has in the United States has shot “Gloomier consumer expec-
expected to eke out a mod- hotels and airlines to gyms, been declining for months. It up to more than 170,000 a tations will weigh on spend-
est gain this quarter before hair salons and entertainment shows that more Americans day, from fewer than 35,000 ing as the holidays approach,”
weakening — and perhaps venues — is still struggling. are finding jobs and no lon- in early September. The ar- cautioned Kathy Bostjancic,
shrinking — early next year. But economists caution that ger receiving unemployment rival of cold weather in much chief U.S. financial econo-
Mark Zandi, chief economist factories, too, remain at risk aid. But it also indicates that of the country could further mist at Oxford Economics.
at Moody’s Analytics, pre- from the surge in coronavirus many jobless people have
dicts annual GDP growth of cases, which could throttle used up their state unem-
around 2% in the October- demand in coming months. ployment aid — which typi-
December quarter, with the And sales of new homes re- cally expires after six months.
possibility of GDP turning mained steady in October, More Americans are collect-
negative in the first quarter the latest sign that ultra-low ing benefits under programs
of 2021. mortgage rates and a paucity that were set up to cushion
Economists at JPMorgan of properties for sale have the economic pain from the

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