WASHINGTON – Home sales are booming. Stocks are setting record highs. Industrial production is clambering out of the ditch it fell into early this year.
And yet the U.S. economy is nowhere close to regaining the health it achieved, with low unemployment, free-spending consumers and booming travel, before the coronavirus paralyzed the country in March. Not while the viral outbreak still rages and Congress remains deadlocked over providing more relief to tens of millions of people thrown out of work and to state and local governments whose revenue has withered.
Every week, roughly 1 million new Americans are applying for unemployment benefits — a depth of job insecurity not seen in any single week during the depths of the 2007-2009 Great Recession.
Economists say that as many businesses have reopened and consumers have begun shopping and spending more, the picture is beginning to brighten, if only fitfully. Most say the economy is growing again. Yet scars are sure to remain from the catastrophic April-June quarter, when, according to the government, the economy collapsed at a 31.7% annual rate — by far the worst quarterly contraction since such record-keeping began in 1947.
Some industries, notably those involving travel and hotels and restaurants, could struggle for years. And while the number of confirmed viral infections has been declining, the threat of a major resurgence remains, especially as students increasingly return to schools and colleges. The consumers whose spending drives the bulk of the economy and the economists who analyze it are decidedly downbeat about the prospects for a return to prosperity.
“As long as we continue to see infection flare-ups, disruptions to activity — especially in sectors that are exposed to social distancing rules — will be ongoing,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “The risk of business failures from repeated closures is high, and the probability of permanent job losses rises with each successive shutdown which could result in permanent damage to the labor market and the economy.’’
The Conference Board, a business research group, reported this week that consumer confidence has tumbled to its lowest level since 2014.
And in survey results released this week by the National Association for Business Economics, two-thirds of the economists who were polled said they thought the U.S. economy remains in recession. Nearly half said they didn't expect it to return to pre-pandemic levels until mid-2022. Eighty percent put the likelihood that any recovery will give way to a “double-dip’’ recession at 25% or more.