From The Washington Post
On Thursday, the latest sign that the economic decline may be bottoming out came as the government reported that 1.9 million Americans had applied for unemployment insurance during the last week of May — a painfully high number but the lowest since the novel coronavirus started spreading widely in the country in March.
The jobs data follows modest signs that the economy may be inching toward the beginnings of a recovery as the nation reopens. Mortgage applications have surged in recent weeks amid record-low interest rates. Consumption of oil and petroleum products is up. The number of travelers at airports, as measured by the Transportation Security Administration’s precheck numbers, has begun increasing in recent weeks. Even restaurant reservations have inched up.
“This covid recession will go down as the shortest and arguably the most severe in history,” said Mark Zandi, chief economist at Moody’s Analytics.
Zandi said the recession caused by the pandemic is likely to be over, almost as abruptly as it started. He points out that private payrolls declined by 2.76 million people in May, according to a report released Wednesday by payroll processor ADP. That was far below analysts’ estimates.
Yet, even when economists declared the Great Recession officially over in June 2009, the unemployment rate did not return to prerecession levels until 2017, a reminder that the economic pain can linger for years. Similarly, experts predict that this recovery will take years.
Cheered on by President Trump, some states have lifted some of their most severe restrictions in recent weeks, more businesses have reopened — at least partially — and brought back workers. But there is still no sense of when commerce will resume at the scale seen late last year. Until there’s a widely available vaccine against the novel coronavirus, the economy is likely to continue struggling at a low rate. And public health officials continue to warn of a second wave of infections in the fall or winter, which could bring on another round of shutdowns.
For now, the U.S. economy is in limbo, with many companies operating at half capacity and a big question mark about how long firms can survive that way. Idled workers aren’t sure when they will be called back, so they are hoarding cash. State and local budgets have been decimated, which is likely to trigger more layoffs later this year.
“These are extremely ugly numbers, but because there were so many forecasts talking about a total collapse of the economy, the numbers we’re seeing, while extremely bad, aren’t the worst-case scenario,” said Lindsey Piegza, chief economist at Stifel Fixed Income. “It’s not as bad as it could have been. It’s an odd silver lining.”
The dueling stories about this economy — it is improving yet remains greatly depressed — are likely to play out all the way through the presidential election. Trump is seizing on any data showing a rebound and is taking credit for the bounce-back in the stock market, where the S&P 500 index just experienced its best 50-day rally since 1952.
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