Yahoo News This week in Trumponomics: The COVID backslide begins
It seemed too good to last, and now the evidence is coming in: the economic recovery is stalling as coronavirus cases surge, mostly in the south.
A huge surge in rehiring in June offered a brief glimpse of the rapid recovery President Trump and millions of other Americans are hoping for. Employers added 4.8 million jobs in June, 25 times what a normal, healthy hiring rate would be. May of those were rehires of workers furloughed as business shut down to restrict the spread of Covid-19 in April and May.
But the Labor Department gathered the data for the June report in the middle of the month, right before the coronavirus case count, which had been falling since early May, started rising again. On June 26, the number of daily new coronavirus cases in the United States hit a new high, and it’s been rising to new records ever since. On April 11, the worst day of infections up to that point, there were nearly 32,000 new cases identified. On July 10, there were 54,000 new cases, and infectious disease expert Dr. Anthony Fauci said this week the United States could hit 100,000 new cases per day.
Ongoing outbreaks are forcing lax shutdown states such as Florida, Texas and Arizona to reevaluate and issue tougher shutdown orders than they did earlier in the crisis. Some consumers who don’t face lockdown orders are staying home anyway, simply to stay safe.
The latest economic data show the damage. “A growing range of indicators suggest the economic recovery stalled in late-June and early July, in part because of a resurgence in virus infections,” Capital Economics explained in a July 10 research note. “There’s clearly a risk that the virus continues spreading unchecked over the coming weeks, pushing the recovery into reverse.” The data include real-time tracking of things like foot traffic at malls, restaurants and auto dealerships, which was recovering through May and early June but is now dropping. That is likely to show up as flat or declining spending and employment in those parts of the economy, as data with a longer lag time dribbles in.
What is Trump doing? Threatening school districts that don’t fully reopen in the fall, and not much else. Trump says he’ll withhold federal aid from school districts if they don’t bring students back, although it’s not clear he can. Still, Trump could be doing far more to help school school districts establish safe conditions that would make parents and teachers comfortable with kids returning, but he’s not. This week’s Trump-o-meter reads FAILING, the second-lowest rating.
Trump is still complaining about too much coronavirus testing, because he thinks it makes the case count go higher. Yet hospitalizations and deaths are also rising again after flattening out, which means the public-health danger is real and worsening. Trump could be helping set conditions for the safe return of kids to school in the fall, by getting behind widespread testing and telling every recalcitrant Republican to wear a mask. Nope.
The easiest part of the recovery is now over, with companies rehiring those they can rehire. There are still 15 million fewer jobs than there were in February, before the Covid shutdowns began. With the virus still rampant, more and more of those layoffs and going to end up as permanent job losses, with some of the businesses that used to employ those workers going under as well.
The sad irony is that it’s now evident that tough shutdown measures followed by careful reopenings actually work. Oxford Economics is measuring the pace of recovery in every state, and is finding that Northeastern and Midwestern states that imposed tough lockdown measures early “are enjoying relatively more robust and enduring recoveries.” The Northeast and Midwest, in fact, are the only regions showing consistent economic improvements.
Other states are going backwards, threatening the entire U.S. economy. “We’re concerned the latest health developments will lead to a double dip [recession], or at least a stalling of the recovery,” Oxford Economics wrote in a July 9 analysis. Forty of the 50 states, accounting for about 85% of national GDP, are now witnessing a rise in cases and are reversing their relaxation of social distancing measures.” Enjoy school, kids.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available. Click here to get Rick’s stories by email.
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