There is No Economic Recovery

Even though economic conditions were absolutely awful, during the month of June the mainstream media kept insisting that the U.S. economy was “recovering” and the stock market kept surging on every hint of good news. But now the “economic recovery” narrative is completely dead, because the numbers clearly show that the U.S. economy is rapidly moving in the wrong direction. On Thursday, the Labor Department announced that another 1.416 million Americans filed new claims for unemployment benefits last week. Prior to this year, the all-time record for a single week was just 695,000, and so we are talking about a level of unemployment that is absolutely catastrophic. But what is really alarming many analysts is that the number for last week was quite a bit higher than the number for the week before. Many states are rolling out new restrictions as the number of confirmed COVID-19 cases continues to surge, and this is having a huge impact on economic activity. For months I have been warning that fear of COVID-19 would prevent economic activity from returning to normal levels for the foreseeable future, and that is precisely what has happened. Overall, more than 52 million Americans have filed new claims for unemployment benefits over the past 18 weeks, and that makes this the biggest spike in unemployment in U.S. history by a very wide margin. In fact, this dwarfs all previous spikes by so much that the others are not even worth mentioning. Of course it isn’t just the employment numbers that are depressingly bad. According to Jefferies, in late June 19 percent of all U.S. small businesses were closed, but now that number has risen to 24.5 percent… As of Sunday, 24.5% of small businesses in the United States were closed, according to Jefferies. That is worse than late June, when only 19% were closed. Jefferies pointed to “particular weakness in COVID hot spots” and noted that small business employment had dropped to levels unseen since the end of May. Just think about that number for a minute. Nearly a quarter of all small businesses in the entire country are closed. And the really bad news is that many of them will never end up reopening. At the beginning of the pandemic, I received a lot of criticism for stating that many of the small businesses that were shutting down at that time would never open again, but over the long-term the numbers have shown that I was correct. In fact, Yelp says that a whopping 60 percent of the restaurants that were initially listed as “temporarily closed” on their site are now classified as permanently closed… It’s tough out there for restaurants and other small businesses. Yelp’s Economic Average report out Wednesday shows exactly how tough: 60 percent of the 26,160 temporarily closed restaurants on the business review site as of July are now permanently shut. Temporary closures are dropping, and permanent shutdowns are increasing.







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