WASHINGTON (Reuters) – The explosive spread of the coronavirus weighed further on the U.S. economic recovery over the past week, with high frequency measures of employment, retail foot traffic and other data pointing to a dismal fact: The rebound may have peaked two months ago and be stalled until a vaccine takes hold.
As the pandemic again broke records, an Oxford http://blog.oxfordeconomics.com/topic/recovery-tracker Economics index of the recovery fell for the seventh time in eight weeks – with mid-October now standing out as the peak of a rebound hemmed in by the intensified health crisis.
A sharp rise in new unemployment claims, to 853,000 for the week ending Dec. 5 from 716,000 in the week before, highlighted the near-term risks the U.S. economy is facing even as the pending distribution of the first vaccines is raising the likelihood of a strong rebound later in 2021.
Indeed, a Reuters poll of economists this week showed further slippage in forecasts for U.S. economic growth for the first quarter of 2021 based on the still-uncontrolled spread of COVID-19 and a fresh round of restrictions imposed by a growing number of states and localities.
Measures of demand, employment and health all declined by Oxford’s estimation, and local indexes fell in all 50 states for the first time since the firm began calculating them.
“Mobility is contracting as cold weather and virus fear keep the country indoors, employment growth is softening, and demand is increasingly hesitant,” wrote Oxford chief U.S. economist Gregory Daco. While arrival of a new vaccine may help next year, “the current virus resurgence can still deal the economy a significant near-term blow.”
That surge led daily fatalities to top 3,000 this week, with the weekly growth in cases now around 1.5 million.
President-elect Joe Biden has pledged new steps to try to control the spread when he takes office on Jan. 20, but between now and then, at current rates of infection, perhaps another 10 million people will have contracted the disease and another 80,000 die from it.
That’s translated into slow or no growth across a variety of high frequency indicators being used to track the recovery. Visits to retail stores fell through the week ending Dec. 5, according to cellphone location data from Unacast https://www.unacast.com/covid19/covid-19-retail-impact-scoreboard, and seatings at restaurants continued a renewed decline, according to data from OpenTable https://www.opentable.com/state-of-industry.
Small business owners say the situation has put them at increasing risk of failure. Meanwhile perhaps 9 million people are at risk of losing unemployment insurance benefits at the end of the year, another blow to the recovery.
Negotiations among U.S. elected officials over new federal assistance are ongoing.
Employment data remains sluggish.
Data on a sample of small businesses provided by time management firm Homebase https://joinhomebase.com/data shows employment through last week down more than 7% from mid-October. Similar data from a larger set of industries from UKG https://www.kronos.com/about-us/newsroom/update-us-workforce-activity showed shift work grew a modest 0.7% in December, which the firm attributed to late-arriving holiday hires at retail stores.
An index of job postings from employment site Indeed https://www.hiringlab.org remains more than 10% below year ago levels, and improvement has slowed to a crawl. An index of new listings from analytics firm Chmura http://www.chmuraecon.com/blog has also shown little improvement over the fall, and is currently more than 20% below last year’s level.
“The time gap between now and when a vaccine is widely distributed looms large,” Indeed Hiring Lab economist AnnElizabeth Konkel said in an emailed statement. “There’s a lot of uncertainty ahead for the labor market going into the new year.”
(Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci)