The Terrifying Next Phase of the Coronavirus Recession – The Atlantic

Now the economy is traveling sideways, as business failures mount and the virus continues to maim and kill. New applications for unemployment insurance, for instance, are leveling off at more than 1 million a weekmore than double the highest rate reached during the Great Recession, a sign that more job losses are becoming permanent. After rising when the government sent stimulus checks and expanded unemployment-insurance payments, consumer spending is falling again, down 10 percent from where it was a year ago. Homebase, a provider of human-resources software, says that the rebound has hit a plateau, in terms of hours worked, share of employees working, and number of businesses open.

The next, terrifying phase of the coronavirus recession is here: a damaged economy, a virus spreading faster than it was in March. The disease itself continues to take a bloody, direct toll on workers, with more than 60,000 Americans testing positive a day and tens of thousands suffering from extended illness. The statistical value of American lives already lost to the disease is something like $675 billion. The current phase of the pandemic is also taking an enormous secondary toll. States with unmitigated outbreaks have been forced to go back into lockdown, or to pause their reopening, killing weakened businesses and roiling the labor market. Where the virus spreads, the economy stops.

That is not just due to government edicts, either. Some consumers have rushed back to bars and restaurants, and resumed shopping and traveling. Young people, who tend to get less sick from the coronavirus than the elderly, appear to be driving todays pandemic. But millions more are making it clear that they will not risk their life or the life of others in their community to go out. Avoidance of the virus, more so than shutdown orders, seems to be affecting consumer behavior. Places without official lockdowns have seen similar financial collapses to those with them, and a study by University of Chicago economists showed that decreases in economic activity are closely tied to fears of infection and are highly influenced by the number of COVID deaths reported in a given county.

Read: A devastating new stage of the pandemic

In other ways, the spread of COVID-19 is keeping Americans from going back to work. The perception of public transit as unsafe, for example, makes it expensive and tough for commuters to get to their jobs. Schools and day-care centers are struggling to figure out how to reopen safely, meaning millions of parents are facing a fall juggling work and child care. This is a disaster. The lingering uncertainty about whether in-person education will resume isnt the result of malfeasance, but utter nonfeasance, the former Department of Homeland Security official Juliette Kayyem has argued in The Atlantic. Four months of stay-at-home orders have proved that, if schools are unavailable, a city cannot work, a community cannot function, a nation cannot safeguard itself.

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The Terrifying Next Phase of the Coronavirus Recession - The Atlantic