The US economic rebound is a patchwork of viral risks and rules


(Bloomberg) – The US economy has exploded along state and city borders, the speed of the rebound largely dependent on the extent of local trade restrictions to tackle a never-ending surge in Covid-19 cases .

California and Illinois, where some of the toughest measures have been imposed, saw increases in state unemployment reports this month, which helped push the US weekly total to a three-month high. . Both states also had November unemployment rates above the national level of 6.7%.

In Florida, where many businesses are licensed to operate at full capacity, state unemployment reports hit their lowest level since March and the November unemployment rate was below the national average, even though employment in the tourism was always depressed.

And even with a new $ 900 billion stimulus package approved by Congress Monday night – extending and stepping up aid to unemployed Americans – the path to recovery will remain uneven across different regions.

Recent data clearly shows that there is a trade-off between jobs and trade restrictions. The economic reality of workers and businesses in a place where business is generally open is very different from those living where things are mostly closed.

Yet increased mobility also has potentially devastating health consequences. Across the country, more than 300,000 people have died from Covid-19, and the recent spike in infections and deaths shows little sign of slowing down.

A major problem is that lockdown measures are often reactive – implemented when the virus is already out of control – rather than proactive, said Joshua Barocas, an infectious disease physician at Boston Medical Center. For workers who have been successful in keeping their jobs, many have to choose their health or paycheck, he said.

“Me, beating the drum of ‘Stay home, stay home, stay home,’ doesn’t do anything,” Barocas said. “It’s a combination of proactive restrictions, coupled with support – for individuals and businesses – and creative solutions to somehow reduce the overall likelihood of transmission.”

The situation has been particularly frustrating for restaurateurs, at least for those who manage to stay in business after many workers shut down permanently and laid off during the pandemic.

In San Francisco, Ryan Cole spent thousands of dollars outfitting his restaurant’s patio with a roof and radiators in the hopes The Vault Garden could attract enough customers to cover the bills. Earlier this month, outdoor dining was closed and Cole put his 35 employees on leave.

“People are just exhausted by the coming and going of change,” he said.

Nationwide, in Jacksonville, Florida, Sam and Kiley Efron’s restaurant, Taverna, remains open in part because local authorities allow alfresco dining. They spaced the tables six feet apart and halved the seats inside. Sales are down about 30%, but that’s enough to cover expenses, including paychecks for about 50 employees.

“I’ve spoken to friends in other states. I’m really grateful to be living in Florida right now, ”said Sam Efron.

The tighter restrictions frustrate restaurateurs like Cole, especially when data suggests other measures may help. A study by researchers at the Federal Reserve Bank of Boston found that mask warrants are effective in reducing at least half of the increase in Covid-19 cases and deaths resulting from increased mobility.

In Duval County, where Jacksonville is located, businesses and schools are widely open, although there is a local order for masks. Adjusted for population, Duval’s daily new cases have overtaken San Francisco’s in recent weeks.

Still, Los Angeles County, which had tighter trade restrictions during that time, has seen a worst increase in infections since mid-November.

New York has seen mixed messages. Statewide contact tracing data in New York State showed that nearly three-quarters of all cases were from family and social gatherings in the past few months, while only 1.4% came from restaurants and bars.

In New York City, however, Mayor Bill de Blasio warned of a potential new closure of non-essential businesses after the holidays, amid an increase in cases.

After the vaccines

Even once vaccines are widely available, areas where lockdowns have generally been tighter – especially those dependent on hospitality and tourism – are likely to have a harder time recovering as many businesses have closed. definitely.

Los Angeles, New York and Chicago, where closures have been strict, have the highest number of permanent business closures among any U.S. metropolitan areas, according to a September report by Bark (NYSE 🙂 Inc.

In the year to October, the economies of states with more restrictive measures, such as California and New York, did less well than those with looser rules, such as Florida, Georgia and Texas. This is based on a coincident index – or a rough measure of the state’s economic growth – produced by the Federal Reserve Bank of Philadelphia.

State-by-state unemployment rates illustrate the economic divide, although the correlation with the number of Covid-19 cases is less clear.

The unemployment rate is below the national average in Tennessee and Oklahoma, where business activity has picked up at least somewhat – but it has been accompanied by some of the biggest increases in new cases in the past two weeks , according to data from Johns Hopkins. In Vermont and Nebraska, where state unemployment rates are lowest, cases are on a downward trajectory.

The concentration of industries also plays a role. The unemployment rate remains above 10% in Hawaii and Nevada, two economies dependent on the hotel industry and suffering from the decline in tourism. Hawaii has imposed and enforced strict measures on travelers to the state, and a new statewide “break” in Nevada went into effect on November 24.

“The way we do business has to change with Covid, but where I think the frustration comes in is the refusal to create some flexibility in the rules,” said Mark Vitner, senior economist at Wells fargo (NYSE 🙂 & Co. “What we really should be doing is trying to find ways to do as much business as possible safely.”

© 2020 Bloomberg L.P.


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