Despite assurances from the Trump administration that better times are at hand, the worsening pandemic is restraining or even snuffing out the economy’s nascent recovery. From restaurant dining to air travel and now to filings for unemployment benefits, a growing body of evidence indicates America’s rebound from the pandemic is stalling days before hundreds of billions of dollars’ worth of federal aid is set to expire.
Lawmakers may eventually iron out an agreement on a new stimulus package, but for now they remain far apart on many of the key details. Whether the talks are ultimately successful or not, one thing is now crystal clear: Until a vaccine or effective treatment for Covid-19 is available, the world’s largest economy will at best post tepid, uneven growth and, at worst, endure an extended period of malaise or even a depression.
“If lawmakers don’t quickly pass another sizable rescue package that includes help to state and local governments and more income support to the unemployed, then the economy will suffer another downturn — a so-called double-dip,” said Mark Zandi, chief economist at Moody’s Analytics. “Unemployment will remain in the double digits until well after the pandemic is over.”
The jobless claims report was so grim — with the ranks of those filing for benefits swelling to 1.42 million — that it even got the attention of stock investors, a group that has been blissfully impervious to bad news of late. They pushed the S&P 500 Index down 1.2% on Thursday, marking the biggest decline in almost a month. Shares in China, Hong Kong and Australia opened lower on Friday.
While the report also showed a decline in continuing claims that suggests hiring has picked up, the rise ins from an already-elevated level is a sign the labor market is going in the wrong direction. That could make President Donald Trump’s case for
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