Amid spike in COVID-19 cases, hopes of US economic recovery may be fizzling

Washington DC: Hopes of a US economic recovery from the coronavirus pandemic has been jolted with several companies announcing layoffs and filing for bankruptcy.

United Airlines announced plans to lay off more than one-third of its 95,000 workers, while Brooks Brothers, which first opened for business in 1818, filed for bankruptcy. Bed Bath and Beyond said that t will close 200 stores, reported The Washington Post.

According to the latest data from Johns Hopkins University, the number of coronavirus cases in the US has risen to 3,364,547 and 135,615 deaths.

Without a uniform federal strategy, many governors rushed to reopen economies before controlling the pandemic. Now states such as Florida, California, Texas and Arizona are seeing a spike in new COVID-19 cases and more than 70 percent of the country has either paused or reversed reopening plans, according to Goldman Sachs.

Morgan Stanley on Friday warned that after surprisingly two months, the economy could begin shedding jobs again this month and in August. According to the report, several regional Federal Reserve officials last week expressed concerns about recovery petering out.

The economy regained around 7.5 million jobs in the previous two months, just one-third of the number lost. Last week, Harley-Davidson said it was eliminating 700 jobs. However, it described the development as unrelated to the COVID-19 pandemic.

The Washington Post citing Morgan Stanley reported that as many as 33 million Americans now are collecting some form of unemployment benefit.

As the virus has raged longer than first expected, some companies are concluding that they just do not need as many workers as they did in February, Heidi Shierholz, former chief economist at the Labour Department was quoted as saying.

The National Federation of Independent Business, in a survey of its members, said that more than half of respondents had used up their loans and 22 percent planned to lay off workers as a result.

“As owners finish using their loan, more are finding that economic conditions are unable to support current staffing levels which were previously supported by the PPP loan,” the industry group was quoted as saying.

Source: ANI