U.S. economy's 'trudge' continues as virus counts surge

By Howard Schneider, Reuters | Posted - Oct. 22, 2020 at 9:31 a.m.

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Weekly data on the U.S. recovery remained tepid as the coronavirus pandemic continued a fall surge across much of the United States.

Estimates of retail foot traffic from Safegraph and Unacast, based on cell phone data gathered by the company, both turned higher over the past week.

But visits to restaurants fell, according to data from reservations site OpenTable, and employment estimates from time management firms Homebase and UKG both declined.

Chmura Economics estimates showed job openings at about three fourths of their predicted level absent the pandemic, unchanged from the week before.

An Oxford Economics broad index of the economic recovery fell slightly, and has remained at about 80% since late August, evidence that shoppers and business owners may have found their balance — for now — between commerce and the risks posed by the pandemic.

Economic growth continues but a "mid-year sprint has slowly morphed into an early-fall trudge," Oxford Economics chief U.S. economist Gregory Daco wrote.

The message from high frequency and other data remains mixed. This week, Daco noted, while indexes of demand and employment increased slightly, "the health situation is deteriorating rapidly, with coronavirus infections rising in 40 states — threatening the foundation of the recovery." The 7-day moving average of daily new infections is back above 60,000, and pointing towards its summertime peak of nearly 70,000.

The economy's performance in the next few months will determine whether it gets through the pandemic with few long-term scars, or with deep wounds to its job market, outsized numbers of women and Black people sidelined from work, and local communities struggling through the loss of businesses small and large.

Next week the United States will issue its first estimate of gross domestic product for the three months from July through September. It is likely to show a record-shattering bounce back from the historic crash in the economy from March through June.

The jobless rate has fallen fast. After hitting 14.7% in April it was 7.9% as of September. Goldman Sachs economist Ronnie Walker said he felt that "signs of long-term damage to the economy remain surprisingly limited so far," with most of those who have lost jobs since February still describing their work outage as temporary, overall commercial bankruptcies still lower than last year, and consumers still spending.

But after the headlines about the booming third quarter pass, attention will turn to what happens from October to December and beyond — how people respond to winter months with a virus still circulating and less chance to socialize outside, and whether the presidential election leads to clearer direction for the country's health and economic policies, or more gridlock and uncertainty.

The country likely ended September several million jobs and about half a trillion dollars of output short of where it was at the end of 2019, a large hole to fill.

The number of new filers for unemployment insurance in the week ended Oct. 17 did fall below 800,000 for just the second time since March, when a national state of emergency was declared. But it remains above the high point of the last recession in 2009, and more than three times the weekly level before the pandemic.

"The labor market is far from being out of the woods," wrote Indeed Hiring Lab economist AnnElizabeth Konkel.

(Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci)

© Copyright Thomson Reuters 2020


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