Federal Reserve Chairman Jerome Powell on Wednesday said that “high-frequency data” is showing that the economic recovery has slowed since mid-June when parts of the country saw spikes in coronavirus cases.
“What that data shows on balance is that the pace of the recovery looks like it has slowed since the cases began to spike in June,” he said.
The chairman said that indicators like consumer spending, hotel occupancy rates, and consumer sentiment have all trended downward since mid-June.
“People aren’t going out to restaurants, bars, gas stations, pharmacies, and salons,” he said.
Google’s Community Mobility Report supports the chairman’s analysis. Its July 25 report shows that foot traffic to places such as restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters is down 19% overall from January and early February, before the pandemic hit the United States.
In virus hot spots, the decreases are larger. In Florida, which has over 450,000 cases, foot traffic is off by 26%. California, with over 475,000 cases, has 33% less foot traffic to these destinations.
In both states, foot traffic showed signs of rebounding in mid-June, but the improvement failed to continue as infections flared and fewer people ventured to indoor public spaces. The same pattern occurred at the national level, according to Google.
As Powell mentioned, consumer confidence dipped in July as some cities and states experiencing eruptions in coronavirus infections suffered slowdowns in commerce, according to the Conference Board’s consumer confidence index.
The surge in virus infections has prompted worry in the small-business sector as two-thirds of owners fear the pandemic will force them to close their doors, according a U.S. Chamber of Commerce poll.
The level of concern about shutting down is particularly high, 85%, for businesses that suffered through the economic shutdown earlier in the year and then struggled to reopen. The threat of shutting down again has prompted owners to reevaluate staffing and future layoffs.
Job gains were made in May and June, 2.7 million and 4.8 million, respectively. But since mid-June, job growth in the U.S. has stalled, especially in areas of the country where coronavirus infections are raging.
Hot spots such as Florida and California saw over 65,000 and 20,000 in new claims for unemployment insurance benefits, respectively, just for the week ending July 11. That’s an unusually high level of layoffs and suggests net declines in employment.
For the economy overall, the number of new jobless claims was 1.4 million for the week ending July 18, the Labor Department reported, which is higher than the prior week’s claims of 1.3 million.
The Labor report marked the first weekly increase in jobless claims since the end of March, when new applications peaked at 6.9 million, and are a troubling sign of danger for the economic recovery and job creation. These losses come on the heels of job gains in May and June, 2.7 million and 4.8 million, respectively.
While several data point suggest a bleak outlook for the economy, Powell stressed that it is too early to tell if a sustained economic downturn will occur, which will largely depend on the path of the virus.
“I want to stress it’s too earlier to say how large that it is [the economic downturn] and how sustained it will be. We just don’t know yet,” he said, adding that “I would be remiss in not stressing this enough: the path of the economy is going to depend to a very high extent over the course of the virus and the measures that we take to keep it in check.”
