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BUSINESS Thursday 26 November 2020
Picture of U.S. economy is worrisome as virus inflicts damage

By MARTIN CRUTSINGER were shuttered at the start
and PAUL WISEMAN of this month, reflecting a
AP Economics Writers steady increase from June's
WASHINGTON (AP) — 16% rate. Consumer spend-
Gripped by the accelerat- ing at local businesses is
ing viral outbreak, the U.S. down 27% this month from
economy is under pressure a year ago, marking a de-
from persistent layoffs, di- terioration from a 20% year-
minished income and ner- over-year drop in October,
vous consumers, whose Womply found.
spending is needed to The heart of the problem is
drive a recovery from the an untamed virus: The num-
pandemic. ber of confirmed infections
A flurry of data released in the United States has shot
Wednesday suggested up to more than 170,000
that the spread of the virus a day, from fewer than
is intensifying the threats to 35,000 in early September.
an economy still struggling The arrival of cold weath-
to recover from the deep er in much of the country
recession that struck in ear- could further worsen the
ly spring. health crisis.
The number of Americans Meanwhile, another eco-
seeking unemployment aid nomic threat looms: The im-
rose last week for a second pending expiration of the
straight week to 778,000, two supplemental federal
evidence that many em- unemployment programs
ployers are still slashing jobs Envelopes from the Florida Department of Economic Opportunity Reemployment Assistance Pro- the day after Christmas
gram are shown, Thursday, Nov. 5, 2020, in Surfside, Fla.
more than eight months af- Associated Press could end benefits com-
ter the virus hit. Before the pletely for 9.1 million job-
pandemic, weekly jobless lytics, predicts annual GDP hotels and airlines to gyms, The government said he to- less people. Congress has
claims typically amounted growth of around 2% in the hair salons and entertain- tal number of people who failed for months to agree
to only about 225,000. Lay- October-December quar- ment venues — is still strug- are continuing to receive on any new stimulus aid
offs are still historically high, ter, with the possibility of gling. But economists cau- traditional state unemploy- for jobless individuals and
with many businesses un- GDP turning negative in the tion that factories, too, re- ment benefits dropped to struggling businesses after
able to fully reopen and first quarter of 2021. main at risk from the surge 6.1 million from 6.4 million the expiration of a multi-tril-
some, especially restau- Economists at JPMorgan in coronavirus cases, which the previous week. That fig- lion dollar rescue package
rants and bars, facing tight- Chase have slashed their could throttle demand in ure has been declining for it enacted in March.
ened restrictions. forecast for the first quarter coming months. months. It shows that more The expiration of benefits
Consumers increased their to a negative 1% annual And sales of new homes re- Americans are finding jobs will make it harder for the
spending last month by just GDP rate. mained steady in October, and no longer receiving unemployed to make rent
0.5%, the weakest rise since "This winter will be grim," the latest sign that ultra-low unemployment aid. But it payments, afford food or
the pandemic erupted. The they wrote in a research mortgage rates and a pau- also indicates that many keep up with utility bills.
tepid figure suggested that note. city of properties for sale jobless people have used Most economists agree
on the eve of the crucial Zandi warned that until have spurred demand and up their state unemploy- that because unemployed
holiday shopping season, Congress agrees on a new made the housing market a ment aid — which typically people tend to quickly
Americans remain anx- stimulus plan to replace a rare economic bright spot. expires after six months. spend their benefits, such
ious with the virus spread- now-expired multi-trillion- But at the heart of the More Americans are col- aid is effective in boosting
ing and Congress failing to dollar aid package enact- economy are the job mar- lecting benefits under pro- the economy.
enact any further aid for ed in the spring, the threat ket and consumer spend- grams that were set up to When the viral outbreak
struggling individuals, busi- to the economy will grow. ing, which remain especial- cushion the economic pain struck in early spring, em-
nesses, cities and states. At "The economy is going to ly vulnerable to the spike from the pandemic. For the ployers slashed 22 million
the same time, the govern- be very uncomfortable in virus cases. Most econo- week of Nov. 7, the number jobs in March and April,
ment said Wednesday that between now and when mists say the distribution of people collecting ben- sending the unemployment
income, which provides the we get the next fiscal res- of an effective vaccine efits under the Pandemic rate rocketing to 14.7%,
fuel for consumer spend- cue package," Zandi said. would likely reinvigorate Unemployment Assistance the highest rate since the
ing, fell 0.7% in October. "If lawmakers can't get it growth next year. Yet they program — which offers Great Depression. Since
The spike in virus cases is together, it will be very dif- warn that any sustained coverage to gig workers then, the economy has re-
heightening pressure on ficult for the economy to recovery will also hinge and others who don't qual- gained more than 12 mil-
companies and individu- avoid going back into a re- on whether Congress can ify for traditional aid — rose lion jobs. Yet the nation still
als, with fear growing that cession." agree soon on a sizable by 466,000 to 9.1 million. has about 10 million fewer
the economy could suffer Some corners of the econ- aid package to carry the And the number of peo- jobs than it did before the
a "double-dip" recession as omy still show strength, or economy through what ple receiving aid under pandemic erupted.
states and cities reimpose at least resilience. Manu- could be a bleak winter. the Pandemic Emergency All of which has left many
curbs on businesses. The facturing is one. The gov- "With infections continu- Unemployment Compen- Americans anxious and un-
economy, as measured by ernment said Wednesday ing to rise at an elevated sation program — which certain. The Conference
the gross domestic prod- that orders for durable pace and curbs on busi- offers 13 weeks of federal Board, a business research
uct, is expected to eke out goods rose 1.3% in Octo- ness operations widening, benefits to those who have group, reported Tuesday
a modest gain this quarter ber, a sign that purchases layoffs are likely to pick up exhausted state jobless aid that consumer confidence
before weakening — and of goods remain solid even over coming weeks," said — rose by 132,000 to 4.5 mil- weakened in November,
perhaps shrinking — early while the economy's much Rubeela Farooqi, chief lion. pulled down by lowered
next year. Mark Zandi, chief larger service sector — ev- U.S. economist at High Fre- The data firm Womply says expectations for the next
economist at Moody's Ana- erything from restaurants, quency Economics. that 21% of small businesses six months.q