A Resurgence of the Virus, and Lockdowns, Threatens Economic Recovery

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WASHINGTON — The United States economy is headed for a tumultuous autumn, with the threat of closed schools, renewed government lockdowns, empty stadiums and an uncertain amount of federal support for businesses and unemployed workers all clouding hopes for a rapid rebound from recession.

For months, the prevailing wisdom among investors, Trump administration officials and many economic forecasters was that after plunging into recession this spring, the country’s recovery would accelerate in late summer and take off in the fall as the virus receded, restrictions on commerce loosened, and consumers reverted to more normal spending patterns. Job gains in May and June fueled those rosy predictions.

But failure to suppress a resurgence of confirmed infections is threatening to choke the recovery and push the country back into a recessionary spiral — one that could inflict long-term damage on workers and businesses large and small, unless Congress reconsiders the scale of federal aid that may be required in the months to come.

The looming economic pain was evident on Tuesday as big companies forecast gloomy months ahead. Delta Air Lines said it was cutting back plans to add flights in August and beyond, citing flagging consumer demand. The nation’s biggest banks warned that they were setting aside billions of dollars to cover anticipated losses as customers fail to pay their mortgages and other loans in the months to come.

May and June will prove to be “easy” in terms of recovery, Jennifer Piepszak, the chief financial officer of JPMorgan Chase, said during an analyst call on Tuesday. “We’re really hitting the moment of truth, I think, in the months ahead,” she said.

Jamie Dimon, the bank’s chief executive, said much of the economic pain had been blunted by federal spending, which was now running out. “You will see the effect of this recession,” he said.

Some companies that used small-business loans to retain or rehire workers are now beginning to lay off employees as those funds run out while business activity remains depressed. Expanded benefits for unemployed workers, which research shows have been propping up consumer spending throughout the spring and early summer, are scheduled to expire at the end of July, while more than 18 million Americans continue to claim unemployment.

Many states are already renewing lockdowns, including California, where officials have ordered indoor bars, restaurants, gyms and other establishments to close. College sports conferences are beginning to cancel fall sports, including the lucrative football season, and concert tours are out of the picture.

“The earlier-than-anticipated resumption in activity has been accompanied by a sharp increase in the virus spread in many areas,” Lael Brainard, a Federal Reserve governor, said on Tuesday. “Even if the virus spread flattens, the recovery is likely to face headwinds from diminished activity and costly adjustments in some sectors, along with impaired incomes among many consumers and businesses.”

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Credit…Taylor Glascock/Bloomberg

Most economists abandoned hope for a “V-shaped” recovery long ago. Now they are warning of an outright reversal, with mounting job losses and business failures. And this time, much of the damage is likely to be permanent.

“Our assumption has to be that we’re going into re-lockdown in the fall,” said Karl Smith, the vice president of federal policy at the conservative Tax Foundation in Washington.

Until recently, Mr. Smith said, he had been pushing administration officials and members of Congress to begin phasing out an extra $600 per week for unemployed workers — perhaps replacing it with an incentive payment for Americans who return to work — and to shift spending toward tax incentives.

The last two weeks of coronavirus data changed his mind. He is now calling for another large economic rescue package from Washington, including extending the enhanced unemployment benefits, offering more aid to small businesses and perhaps sending another round of stimulus checks to American households.

“We have to go back to liquidity mode. I know in Congress there’s not a lot of appetite for that,” Mr. Smith said. “But there’s still a chance it could be a horrible fall, and the legislative calendar is not set to deal with that.”

Trump administration officials have suggested a willingness to negotiate with Democrats on unemployment benefits, small-business aid and possibly another round of stimulus checks, while also pushing for business tax cuts that have found little traction in Congress. Some Senate Republicans want to cut off pandemic spending increases entirely, though their leadership has expressed openness to a deal if it includes protections from lawsuits for businesses that reopen.

Small businesses around the country say that if lockdowns persist without some type of additional financial cushion from Congress, they will be faced with a dire choice.

At Sonoma Fit, a three-gym chain in Northern California, business was finally starting to stabilize this month after weeks of lost revenue and extreme uncertainty. Old customers were starting to come back. New ones were signing up. The thousands of dollars that Jennifer and Adam Kovacs, the owners, had spent to overhaul their facilities to allow for social distancing seemed to be paying off.

Then on Monday, a friend called to tell Ms. Kovacs that the governor had just ordered gyms in much of California to close again. Ms. Kovacs said she was “blindsided” — but she tried to hide it from her 17-year-old daughter, who was working at the front desk.

About three-quarters of Sonoma Fit’s nearly 5,000 members stuck with them through the first shutdown, but Ms. Kovacs said she thought they would be lucky to retain half their members this time. She said she could not imagine business returning to normal as long as rules differed by county and industry — and were subject to change at a moment’s notice.

“I really cannot express the level of fear and frustration and helplessness that we feel,” Ms. Kovacs said. “This slow reopening isn’t working. Shut down everything, shut down every single thing, and keep us home for three weeks. I’d rather do that than this off-on, off-on, off-on. Because every time we do that, we’re losing thousands of dollars.”

Credit…Richard Vogel/Associated Press

Mr. Trump’s advisers continue to predict the economy will rebound sharply in the months ahead, and the president has made increasingly insistent calls for a full reopening of schools this fall. Many economists agree that the economy cannot fully recover — let alone grow — if millions of young children remain at home without viable child care options. Yet failure to control the virus has made reopening a risky trade-off.

Some of the nation’s largest school districts, including Los Angeles and San Diego, have announced that they will not immediately return to in-person classroom instruction when the new school year begins. In New York and other large public school districts around the country, officials are preparing to bring students back for only part-time instruction and have warned parents they could shut down again if cases rise.

Those announcements have not been accompanied by government-funded programs that economists say would help schools open safely or ensure access to child care for millions of Americans who are struggling to juggle parenting and work — a group that is disproportionately made up of women who are not white. Even as Mr. Trump pushes a return to classrooms, many districts are facing pandemic-induced budget shortfalls.

  • Frequently Asked Questions

    Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


Census figures from 2019 analyzed by Melissa S. Kearney, a University of Maryland economist who directs the Economic Strategy Group at the Aspen Institute, show that nearly one-quarter of American workers — about 38 million adults — have at least one child under the age of 13 at home. The share is higher among so-called essential workers who are required to report to their jobs during lockdowns, and it rises to one-third for workers in low-income families.

Only 16 percent of all workers with a young child have a nonworking spouse at home who could plausibly care for children who are not in school in order for a spouse to report to work, Ms. Kearney said.

“There’s millions of workers that can’t go back to work if their kids don’t have a safe place to be, most days a week,” Ms. Kearney said. “This is not, get schools open or don’t get schools open. We need to figure out a way to get schools open safely.”

Even for workers who are able to do their jobs from home, having to juggle parenting responsibilities during the day reduces productivity and hurts the economy, Ms. Kearney added. “It’s hard to work at home when kids are at home.”

Driving all that damage is the resurgence of the virus. The federal government is nowhere close to the testing and tracing capacity that some economists have long warned are needed to restore consumer confidence until a vaccine is found. Lawmakers at every level, on school boards and in Congress and the White House, have not coalesced around a unified approach to getting as many Americans as possible back to work safely by the fall.

The country has now tried two strategies to raft its economy through the pandemic: shutting down commerce to slow the spread of the virus and rapidly lifting restrictions on activity to get business humming again. It has not followed through on either approach.

Credit…Cooper Neill for The New York Times

Officials in Florida, Texas and other states began a rapid reopening of their economies in May, while the nation’s infection rate remained higher than those of other wealthy nations — and well before the federal government had a plan to ensure the safety of anything resembling normal business activity. An ensuing surge of cases in the Southeast and Southwest has forced some governors to reimpose limits like shutting down bars.

Restaurants, retailers and other businesses that have partly adapted to the new realities of the crisis, often by moving some operations outdoors, must now brace for the prospect of at least several more months of constricted revenues as colder weather sets in. Broadway has shuttered until 2021. Popular music groups have canceled tours, leaving independent concert venues with no way to earn money to survive.

“I am normally a very optimistic person, and I have never seen an entire industry face an existential struggle like we are facing right now,” said Audrey Fix Schaefer, a communications director for music venues in Washington, D.C., including The Anthem and the 9:30 Club, and for a newly formed trade group called the National Independent Venue Association. “It is that dire.”

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