Pending home sales rebounded strongly in May and June amid declining mortgage rates. Existing home sales also rose sharply in June. Soaring jobless claims began declining in March as states started to reopen and the unemployment rate declined from a high of 14.7 percent in April. But the increase last week suggested the fresh wave of virus cases and a return to stricter lockdown orders in some states has dented the labor market comeback.

Economists say a great deal has to go right for this rosiest of scenarios to play out including swift passage of further enhanced jobless benefits, rapid progress in vaccine development and the survival of thousands of businesses that are unlikely to make it through further lockdowns.

Not many are confident that all of this will come together.

To me it seems like a pipe dream. I cannot image a V-shaped recovery in the offing any time soon, said Beth Ann Bovino, chief U.S. economist at Standard & Poors Ratings Services. Aside from the fact that Covid-19 doesnt seem to be under control, this is a $22 trillion economy. You cant turn it off and on like a light bulb.

The most likely scenario painted by economists is that a significant bounce back does arrive in the third quarter given the depth of the drop in the second. But the persistence of the virus, reluctance of Americans to go back to their offices or go out to shop and eat and spend money keeps a lid on the scale of the recovery.

Under this scenario, the unemployment rate could stagnate or even rise again before the election as fresh lockdowns cause more businesses to lay off workers and widespread uncertainty over the future keeps a lid on business investment.

Any significant lapse in expanded jobless benefits, which officially expire July 31 but have already run out for many, could also put a major dent in spending and lead to increases in defaults on mortgages, credit cards, automobiles and other loans.

We still have a large part of the population that still depend on these benefits, Moya said. And its not easy to be optimistic about large swaths of the labor market. I once thought we might see the unemployment rate drop to around 8 percent this year but now it looks like it will probably be higher.

Moya added that good vaccine news probably wont arrive until October or November with the completion of the first Phase III trials. And that means Americans will probably remain hesitant to engage in a lot of normal economic activity. The work-from-home economy will remain resilient but you arent going to see a widespread return to normalcy very quickly.

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U.S. suffered worst quarterly contraction on record as virus ravages economy - POLITICO