For the second time in as many days, Federal Reserve Chair Jerome Powell took to Congress Wednesday.
Powell used his platform in front of the House Financial Services Committee to warn Congress against pulling back support for the economy too soon. Powell’s warning comes during a critical time that saw nine states hit record highs in COVID-19 cases even as economic indicators are beginning to point towards recovery.
And while economic indicators are showing improvement, the fragility of those improvements will surely be tested over the coming weeks. From April to May, the U.S. had its first drop in unemployment since the start of the pandemic. The unemployment rate fell from 14.7% to 13.3% month-over-month. The same period saw new cases fall from a monthly increase of over a 100% in the April to a more modest 33% increase for the month of May.
Despite the improvements in the economy and the phased reopenings in states, there are still many potential hindrances to a recovery. These include increases in cases and insufficient stimulus programs. In addition to those issues, many of the states currently seeing spikes in cases aren’t the states that were hotbeds before.
It is alarming that these new states are becoming coronavirus hotbeds because these states had already suffered from the economic crash that came alongside the initial wave that hit New York City particularly hard. In fact, each of the nine states- Alabama, Arizona, Florida, Nevada, North Carolina, Oklahoma, Oregon, South Carolina, and Texas- which either recorded a record number of new cases or hit a new high for the seven-day average number of new cases on Tuesday have experienced an equal, if not greater economic toll from the pandemic.
Unemployment in each of the states listed above is between 12.1 and 15.4 percent, with the exception of Nevada which currently has the highest unemployment rate in the country at 28.2%. When excluding Nevada, these state’s unemployment rates align with the national rate of 13.3%, and are not much lower than New York’s 14.5% unemployment rate or New Jersey’s 15.3%.
With cases falling in those areas that were previously hardest hit, and rising in these new areas, we are beginning to see the disparity in how different regions of the country are being affected by the coronavirus.
With the exception of Washington, where the most-common job is the remote-capable computer software developer, and Florida, whose most common job is primary school teachers, the most common jobs in each of the other seven states above are retail, customer service, and trucking. This poses a huge threat to those states because those jobs were not only the first to go, but they are also the types of jobs that are most likely to see temporary layoffs become permanent.
Despite Vice President Pence calling the second wave of cases "overblown" yesterday and warning that the media using it to instill fear, the locations of the spikes is cause for concern regardless of the overall trend for the country. The locations currently spiking represent vulnerable populations and economies that may see permanent changes to their economies and potentially even declining populations if those jobs are allowed to disappear permanently.
