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Economic crisis deepens as pandemic surges

Countdown to end of extra unemployment insurance continues
by Masao Suzuki |
June 26, 2020
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San José, CA - For the second week in a row, new applications for state unemployment insurance or UI did not drop by much, despite economists’ expectations. New claims for the week ending June 20 were 1.48 million, down only 28,000 from last week’s initial estimate. New applications for the Federal Pandemic Unemployment Assistance, or PUA, fell by 42,000 to 728,000 last week. Together the PUA and state unemployment insurance applications topped 2.2 million, only slightly lower than the 2.27 million total for the week before.

Continuing claims for state unemployment insurance, PUA, the Federal Pandemic Emergency Unemployment Compensation for the week ending June 6 totaled 30.6 million people, up by 1.3 million from the week before. Both the new applications number and the total continuing claims show little change as the economy crisis gets worse in the face of rising infections.

Another sign of mixed signals on the economy came from the housing market. On Monday, June 22, the National Association of Realtors reported that existing home sales fell by 9.7% in May from the April number. Existing home sales were at a 13-year high just in February and have fallen since. The next day, the Census Bureau reported that new home sales rose by 16.6% from April to May. But with existing home sales outnumbering new home sales by almost six to one, overall home sales fell.

The day before, on Wednesday, June 24, the total U.S. count for daily infections hit a new high of almost 37,000 new cases in one day. Twenty-nine states have had growing numbers of infections while in only 12 are infections falling. While the earlier peak in infections was centered in New York City and the Northeast, today the virus is burning across the U.S. Sunbelt in southern and western states. One of the hardest hit cities, Houston, has seen its intensive care unit beds fill to capacity with COVID-19 patient is just days away from being swamped as was New York City two months ago.

Across the country there are more and more reports of businesses closing down again as the virus spreads. Other businesses are seeing a drop in sales and/or are scaling back their openings. In the Houston area, Apple has closed eleven of its stores, in addition to others closed down last week in other southern states. In recent days nutritional supplement retailer GNC as well as the parent company for Chuck-E-Cheese both filed for bankruptcy, paving the way for more business closings and layoffs. Troubled retailer Macy’s also announced the layoff of almost 4000 management and support staff and Walt Disney delayed the planned opening of its original Disneyland in Anaheim, California.

The pandemic is also threatening plans for college and professional sports to restart their games. More and more players and staff are found to be infected. Teams that planned to move to Sunbelt states, which had fewer cases two months ago, now find themselves in virus hotspots. While professional sports across Europe and Asia are restarting - albeit without fans in the stadiums - the failure to control the pandemic as other countries have done means Americans may have to learn to like foreign sports or continue the stale diet of past games.

In the meantime, the Trump administration continues to double down on denial. Larry Kudlow, director of Trump’s National Economic Council, said again that he expects a “V-shaped” recovery despite the signs the crisis is continuing. Trump again said that the virus is going to fade away and continued to refuse to wear a mask, while making his racist comments. This sets the stage for Republicans to refuse to extend the additional unemployment insurance benefits of $600 a week that has kept many households afloat. These benefits will all end in only four or five weeks, depending on the state, near the end of July.

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