Additionally, the worsening pandemic threatens to accelerate the pace of layoffs as more states and localities restrict public gatherings and mandate fewer hours and capacity for restaurants, bars, and other businesses. Regardless of what governments do, many Americans are likely to stay at home – and away from local businesses – until they feel safe again.
The Conference Board, a corporate research group, reported Tuesday Consumer confidence weakened in November, which was hurt by lower expectations for the next six months.
Data firm Womply says 21% of small businesses closed earlier this month, reflecting a steady increase from the 16% rate in June. Local business consumer spending this month is down 27% year-over-year, up from a 20% year-over-year decline in October, Womply said.
At the heart of the problem is an untamed virus: the number of confirmed infections in the US has increased from less than 35,000 in early September to more than 170,000 a day. The arrival of cold weather in much of the country could further exacerbate the health crisis.
Meanwhile, another economic threat looms: The impending expiration of two federal unemployment programs on the day after Christmas could erase the benefits for 9.1 million people, according to the Century Foundation think tank. Congress has failed to agree on new stimulus aid for the unemployed and struggling businesses for months after a billion dollar bailout passed in March expired.
Most economists warn that without further government assistance, difficulties will worsen for the unemployed and for companies and states that get into trouble and have to cut services and jobs.
The flow of benefits makes it difficult for the unemployed to pay rent, buy groceries, or keep up with utility bills. Most economists agree that this aid is effective in stimulating the economy as the unemployed tend to spend their benefits quickly.
When the virus outbreak broke out in the spring, it depressed the economy at an amazing rate. Employers cut 22 million jobs in March and April, bringing the unemployment rate to 14.7%, the highest rate since the Great Depression. Since then, the economy has regained more than 12 million jobs. Yet the nation still has about 10 million fewer jobs than it did before the pandemic broke out.