U.S. economy faces looming test as coronavirus wildfire rages

U.S. infections of COVID-19 are growing by more than 1 million a week, according to data from the COVID Tracking Project, and deaths are on the rise too. More than 252,000 people in the country have lost their lives to the disease.

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The uneasy balance between the wildfire-like spread of the coronavirus in the United States and an economy that remains largely open may be tested in coming weeks if face mask mandates and other lighter-touch measures fail to control the crisis.

U.S. infections of COVID-19 are growing by more than 1 million a week, according to data from the COVID Tracking Project, and deaths are on the rise too. More than 252,000 people in the country have lost their lives to the disease.

The intensifying pandemic may already have slowed hiring and begun to curtail retail spending on the cusp of the holiday shopping season, and JPMorgan analysts on Friday said they now think the economy may actually contract again at the start of the year as government restrictions spread.

Instead of the “tailwind” of growth provided as stores reopened over the summer, the United States “now faces the headwind of increasing restrictions on activity. The holiday season – from Thanksgiving through New Year’s – threatens a further increase in cases. This winter will be grim,” wrote the analysts, who forecast growth of -1.0% on an annualized basis in the first quarter of 2021.

Some local governments are taking more aggressive steps already, with New York City again closing schools. In a rare federal response from the “lame-duck” administration of President Donald Trump, the U.S. Centers for Disease Control and Prevention has urged Americans not to travel for next week’s Thanksgiving holiday, which typically sees tens of millions on the move.

Most states, though, are moving gingerly, curbing restaurant hours or seating capacity, but not shuttering nonessential businesses like during the early months of the U.S. outbreak in the spring.

Still, the surge in cases appears to have capped the U.S. economic rebound, according to high-frequency data tracked by economists for real-time evidence about the recovery.

Employment at a sample of mostly small businesses from time management firm Homebase joinhomebase.com/data declined for a fourth week, and shifts worked across different industries fell, according to time management firm UKG.

“The uncertainty that exists right now and has existed really since mid-summer is making it really hard for business owners to think about growth,” said David Gilbertson, UKG vice president for strategy and operations. “We seem to take one step forward, and then one step back.”

The decline in shifts from mid-October to mid-November likely points to a weakening jobs report in November, he said.

LOOKING ‘GRIM’

Since the spring’s catastrophic drop in employment, the economy has clawed back about half of the more than 20 million lost positions. But momentum is slowing, and last week the number of new claims for unemployment insurance rose for the first time in about a month.

An index of new job postings from analytics firm Chmura www.chmuraecon.com/blog as of August had reached a high of 85% of the level predicted in the absence of the pandemic, but is now at 67%.

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