Trusted Professional

New Infections Eroding Nascent Recovery

Optimism on a fast recovery is fading fast, as recent economic gains from states reopening are starting to crumble due to a rise in new COVID-19 infections, according to the Wall Street Journal. The Journal noted that much of the new economic disruption is centered around California, Texas, Arizona, and Florida, all of which had previously begun reopening a wide variety of businesses. However, the Journal pointed out that their pain belongs to the rest of the nation as well, as these states account for 30 percent of all U.S. economic output, meaning that there will be a strong ripple effect from these disruptions.

Already, according to a chart in the Journal story, the percentage of small businesses open has edged lower, going from 77.03 percent on June 30 to 73.16 on July 6. People, it seems, are once more hesitant to shop, eat out, and do other things that had been slowly boosting the economy over the past few weeks. Job postings are also down, sinking by 20 percent from mid-June; hiring in the food and accommodation industry fell even lower: near 50 percent compared with just the previous week.

The Washington Post noted that many of the new jobs created in the new recovery have been part-time or in industries especially vulnerable to the pandemic's whims, or both. The rate of those working part-time due to economic conditions has doubled since February, while those who work part-time by choice have fallen by 23 percent. These jobs are especially fragile, seeing as how, according to Bloomberg, 40 percent of Americans plan to cut back spending on commodities such as movies, live events, bars, restaurants, gym memberships, and haircuts. The only things Americans plan to increase their spending on, it seems, is child care, housekeeping, and (encouragingly) charity.

Another Washington Post article reports that finding child care is one of the biggest impediments to an economic recovery, as over a third of the workforce has children at home. With many schools, day care centers, and other places to drop off the kids closed, some parents feel they have no choice but to either quit their job or reduce working hours. Even if they are working, the Post said that parents now spend an average of eight hours a week attending to their children's needs. This hits working class parents especially hard because their jobs typically require a physical presence.

The new economic disruptions, combined with the damage already done, have further imperiled tax revenues. State and local governments across the country are reporting steep drops in collections, which serve to stress these cash-strapped governments as they try to keep vital services running. The Wall Street Journal reported that this has prompted spending cuts in public services, especially education but also fire, police, roads, water and trash collection.