Huge economic plunge reveals COVID-19’s toll
WASHINGTON — The coronavirus pandemic sent the U.S. economy plunging by a record-breaking 32.9 percent annual rate last quarter and is still inflicting damage across the country, squeezing already struggling businesses and forcing a wave of layoffs that shows no sign of abating.
The economy’s collapse in the April-June quarter came as a resurgence of the viral outbreak has pushed businesses to close for a second time in many areas. The government’s estimate of the second-quarter fall in the gross domestic product has no comparison since records began in 1947. The previous worst quarterly contraction — at 10 percent — occurred in 1958 during the Eisenhower administration.
So steep was the economic fall last quarter that most analysts expect a sharp rebound for the current July to September period. But with coronavirus cases rising in the majority of states and the Republican-controlled Senate proposing to scale back aid to the unemployed, the pain is likely to continue and potentially worsen in the months ahead.
The plunge in GDP “underscores the unprecedented hit to the economy from the pandemic,” said Andrew Hunter, senior U.S. economist at Capital Economics. “We expect it will take years for that damage to be fully recovered.”
That’s because the virus has taken square aim at the engine of the American economy — consumer spending, which accounts for about 70 percent of activity. That spending collapsed at a 34.6 percent annual rate last quarter as people holed up in their homes, travel all but froze, and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.
That has led to mammoth job losses. In a sign of how weakened the job market remains, more than 1.4 million laid-off Americans applied for unemployment benefits last week. It was the 19th straight week that more than 1 million people have applied for jobless aid. Before the coronavirus erupted in March in the U.S., the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week, even during the Great Recession.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said the jobs numbers are disheartening.
âA resurgence in virus cases has resulted in a pause or rollback of reopenings across states and the pace of layoffs is likely to pick up just as expanded unemployment benefits are expiring,ã Farooqi said
An additional 830,000 people applied for unemployment benefits under a new program that extends eligibility for the first time to self-employed and gig workers. All told, the government says roughly 30 million people are receiving some form of jobless aid, though that figure might be inflated by double-counting by some states.
In Ohio, 27,937 new jobless benefit claims were filed last week, a drop from more than 30,000 the week ending July 18. Ohio now has more than 1.5 million claims filed over the last 19 weeks and has paid out more than $5.7 billion to 764,000 Ohioans.
In Mahoning County there were 565 new claims, bringing the total there to more than 32,800.
In Trumbull County last week, there were 480 new claims, pushing the 19-week total to more than 27,800.