Layoffs continue, businesses operate below capacity as COVID-19 fears persist
Following the reopening of some states, COVID-19 cases are surging across the nation, leading many to question whether the recent uptick in economic activity will be short-lived. According to Bloomberg, former Treasury Secretary Lawrence Summers ”told the Economic Club of New York on Wednesday that 30% of the economy will need to be shut back down — either by government decree or by people and companies acting on their own — to prevent the pandemic from getting out of control.”
Concern over the length and severity the first wave of coronavirus will have on the American economy is not limited to the former Treasury Secretary. Peter Hooper, global head of economic research for Deutsche Bank, warned that if older populations who are more vulnerable to COVID-19 take a cautious approach to reopening, consumer spending will remain below normal levels.
Michael Feroli, chief U.S. economist for JPMorgan Chase, warned that repeated shutdowns and lower spending “would create ‘real problems’ for many U.S. businesses with low profit margins because they would still have to operate well below capacity due to limited consumer demand,” according to Bloomberg.
Surging cases, continued consumer apprehension, and yesterday’s announcement that 1.5 million Americans filed for unemployment point toward a more grueling economic recovery than hoped – and that hope alone will not get America’s economy back on track.
To avoid the worst possible outcomes – long-term unemployment, mass bankruptcies, and the social unrest that accompanies lack of economic opportunity – Congress must act.
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