A sudden surge in the number of COVID-19 cases across the US is threatening to derail the nascent economic recovery as many states have either paused or partially reversed their reopenings, officials have warned.
“Economic activity in states with the most significant increases in cases in recent days, including Arizona, California, Florida and Texas, appears to be rolling over,” Mark Zandi, chief economist of Moody’s Analytics, wrote in an analysis on Monday.
“It is increasingly clear that many governors reopened their states too quickly, reigniting the virus and hurting their economies,” Zandi said, adding containing the virus and supporting the economy are not mutually exclusive.
The bulk of the increase in COVID-19 infections has been in the states of California, Arizona, Texas, Florida, Georgia and the Carolinas, reports Xinhua news agency
“Some increase in COVID-19 cases was expected as the economy reopened and testing continued to ramp up. The rise in infections, however, has been greater than can be explained by testing alone,” the Economics Group wrote Friday in a report, noting many states and metro areas have either paused or partially reversed their staged re-openings, which will weigh on economic growth this summer.
US Secretary of Health and Human Services Alex Azar said on Sunday that the “window is closing” for the country to curb the surge of COVID-19 cases, while New York Governor Andrew Cuomo blamed the spike on a failure to act earlier.
Even in the absence of new containment measures, the renewed threat of the coronavirus will likely lead to more cautious consumer and business behaviour and weigh on the recovery nationwide, according to economists.
“The third-quarter bounce in real GDP growth, which we have been expecting to be almost 20% annualized (after an over 30 per cent annualized decline in the second quarter), is in jeopardy,” Zandi said, urging Congress to pass another coronavirus relief bill to help support the economy.
The US economy contracted at an annual rate of 5 per cent in the first quarter this year, according to the Commerce Department. That figure, however, still does not fully capture COVID-19’s economic damage, and many analysts believe that the decline in the second quarter is expected to be much deeper.
Since February, US employers have cut nearly 20 million jobs from payrolls, reversing almost 10 years of job gains, according to the Labor Department.
The unemployment rate jumped to a post-World War II high of 14.7 per cent in April, and then moved down to a still very elevated 13.3 percent in May.
As of Tuesday morning, the US accounted for 2,588,582 COVID-19 cases, with 126,133 deaths. Both tallies are currently the highest in the world.