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A strong economic recovery depends on effective and sustained containment of Covid-19, economists said in a new Wall Street Journal survey. More than 90% of business and academic economists agreed “somewhat” or “strongly” that economic recovery depends on containing the virus. “A virus resurgence will push consumer spending back into hibernation,” said Scott Anderson, chief economist at Bank of the West. Federal Reserve officials, including Chairman Jerome Powell, have voiced similar views in recent days, Harriet Torry and Anthony DeBarros report.
The U.S. entered a recession in February, the National Bureau of Economic Research determined last month. A recovery could already be under way. Economists in the survey estimated that gross domestic product contracted at a 31.9% annual rate in the second quarter. They expect the economy will expand at a 15.2% rate in the third quarter—though the obvious downside risk is from another big outbreak.
WSJ Video: Economists have long used letters of the alphabet like V and U to describe economic recoveries. But the coronavirus downturn is so different from past recessions that economists are coming up with new shapes to describe the potential return to growth. WSJ’s Jon Hilsenrath explains.
WHAT TO WATCH TODAY
The U.S. producer-price index for June is expected to increase 0.4% from a month earlier. (8:30 a.m. ET)
The Baker Hughes rig count is out at 1 p.m. ET.
Back to Work, Slowly
New applications for unemployment benefits edged down last week and the number receiving payments fell to the lowest level since mid-April. The fall in new claims extends a trend of gradual declines from a peak of 6.9 million in mid-March, when the coronavirus pandemic and mandated business closures shut down swaths of the U.S. economy. The modest easing of unemployment rolls, meanwhile, suggests new layoffs are being offset by hiring and recalling of workers, Eric Morath reports.
One other thing to watch in the weekly jobless claims report: The headline figures are for regular state programs. While those have been trending lower, the number of people receiving benefits through pandemic-response programs is going up. When you combine the array of long-established and brand new state and federal programs, total continuing claims hit a record high of 32.9 million during the week ending June 20, the latest data available.
Treasury Secretary Steven Mnuchin said the Trump administration is working with the Senate to pass a new bill for coronavirus-related economic aid by the end of July. Mr. Mnuchin said the administration supports a second round of economic impact payments to households, an extension of enhanced unemployment benefits for furloughed workers and a “much, much more targeted” version of the Paycheck Protection Program of forgivable loans for small businesses, Paul Kiernan reports.
Harley-Davidson said it would cut about 700 jobs as part of a global overhaul, the latest company to reduce its workforce as the coronavirus pandemic depresses economic activity. The job cuts amount to about 13% of the company’s global workforce. Other companies have also said recently they would shed workers, including Walgreens Boots Alliance, United Airlines and Levi Strauss, Austen Hufford reports.
Meatpackers are trying to replace human meat cutters with robot butchers. Companies like Tyson and JBS have been slower to automate than other manufacturing sectors. The coronavirus pandemic has changed that, Jacob Bunge and Jesse Newman report.
U.S. cases hit another daily record. New cases in the U.S. rose by more than 63,000, as hospitals in Texas, California and other states struggle to accommodate a surge of new patients.
What’s behind new Covid-19 outbreaks? America’s patchwork of policies. Skyrocketing coronavirus cases in the South and West reveal missteps at all levels of government, Arian Campo-Flores, Rebecca Ballhaus and Valerie Bauerlein report.
Individual companies are often forced to step into the breach. Starbucks will require customers in the U.S. to wear masks at company-operated stores starting next week, as retailers look to keep employees and patrons safe, Heather Haddon reports.
Can We Build It? Yes We Can!
Gold is climbing toward a record high, oil futures went from minus $40 a barrel to $40 in a month and a half, but the hottest commodity in the U.S. these days is wood. Prices for forest products like lumber and plywood have soared because of booming demand from home builders making up for lost time, a DIY explosion sparked by stay-at-home orders and a race among restaurants and bars to install outdoor seating areas. Lumber futures are up more than 85% since April 1, Ryan Dezember reports.
WHAT ELSE WE’RE READING
Was shutting down the economy worth it? “Based on the best currently available evidence, we estimate that, by the end of 2020, Covid-19-mitigating public health measures will save between 500,000 and 2,700,000 lives in the U.S.; however, the economic downturn from shelter-in-place measures and other restrictions on economic activity could create a collateral loss of 50,400-323,000 lives. This manuscript concludes that Covid-19-mitigating public health measures are justified; however they can create potentially significant, albeit less overt, mortality,” Olga Yakusheva, Eline van den Broek-Altenburg, Gayle Brekke and Adam Atherly write in a new working paper.
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