Home sales have set a 14-year high, but consumer spending has slowed, and unemployment has increased and may worsen after government health officials warned against holiday travel as part of the effort to curb the spread of COVID-19.
In the past, economic performance often varied by region based on the type, strength and variety of industries as well as educational level. It was no mystery why California’s Silicon Valley prospered while the Midwest’s Rust Belt contracted or isolated regions in the South stagnated.
The coronavirus pandemic appears to have injected a new element into the mix: class. Interestingly, differences produced by class aren’t rigidly defined by region.
Even so, many working class renters are priced out of the market, while white collar employees who can work from home have money to upgrade their homes as they ignore, and in many cases, escape the travails of big-city life.
In Manhattan, many upscale residents have fled the City for upstate New York, the Hamptons on Eastern Long Island, Connecticut and New Jersey.
Meanwhile, the National Association of Realtors reported that October sales of existing houses in the Midwest outpaced all other regions of the nation.
The jump in home sales plays out against an increase in new coronavirus infections as the weather turns brisk. On Thursday, there were 187,833 new coronavirus cases, exceeding the previous record by more than 10,000, according to statistics compiled by Johns Hopkins University.
A total of 2,015 people died from COVID-19 on Thursday, boosting the total to 252,555. Worldwide, about 57 million people have been infected and about 1.36 million have died, Johns Hopkins reported.
In response, the U.S. Centers for Disease Control and Prevention (CDC) urged people to stay home during the Thanksgiving break next week–a move that is likely to further damage the struggling travel, hotel, restaurant and entertainment industries if it continues into 2021.
More cutbacks in those sectors could mean public-facing workers will be hit with another round of layoffs, dropping them farther behind those who can work from home.
Travel increases the chance of getting and spreading the coronavirus. Staying home, especially during the holidays, is the best way to protect yourself and others from COVID-19, the CDC said.
“COVID-19 is turning out to be a formidable foe,” Dr. Henry Walke, the CDC’s incident manager for the federal agency’s coronavirus response, said Thursday during a phone-in news conference.
“At this critical phase of the COVID-19 Pandemic, CDC is recommending against travel during the Thanksgiving holiday,” he said.
For those who do travel, the CDC recommended wearing a mask in public settings, including public transportation, keeping six feet away from others not from the same household, and frequent hand-washing with soap and water or a hand sanitizer.
The job market offered another downbeat indicator of the nation’s overall economic activity. First-time jobless claims increased last week to 742,000, topping the 710,000 expected by analysts surveyed by Dow Jones. The uptick in jobless claims was the first after four consecutive weeks of decline, the U.S. Bureau of Labor Statistics reported.
But continuing claims, or workers who have received unemployment benefits for at least one week, fell 428,000 to 6.37 million, a new low during the coronavirus pandemic. The unemployment rate, or the percentage of workers receiving benefits compared with the entire labor force, fell to 4.3%. It peaked at 14.7% in April.
The highest unemployment rates for the week ending October 31 were in California (8.3%), Hawaii (8.3%), New Mexico (8.0%), Nevada (7.6%), Georgia (6.5%), Pennsylvania (6.4%), Alaska (6.2%), Massachusetts (6.2%), District of Columbia (6.0%), and Illinois (5.7%), the Bureau of Labor Statistics said.
The number of people working part-time for economic reasons grew by 383,000 to 6.7 million in October after declining for five consecutive months. These workers, who wanted to work full-time, had their hours cut or were unable to find full-time work, government statistics showed.
Growing unemployment, the move to part-time work and an increasing number of coronavirus infections appears to be making consumers more cautious. U.S. retail sales increased 0.3% in October, slower than expected, the U.S. Commerce Department said. Economists surveyed by Reuters expected a 0.5% increase. September’s figure was cut to a 1.6% increase from the initially reported 1.9% jump.
Consumer spending represents about two-thirds of the U.S. economy.
Macy’s said third quarter sales fell to $3.99 billion from $5.17 billion a year ago, a decline of 22.82%. The results, released a week before Black Friday, suggest a difficult holiday season ahead for the nationwide retailer. That could indicate there will be fewer temporary retail jobs this year, especially as online sales continue to grow and established retailers file for bankruptcy amid the pandemic.
New government-imposed restrictions and a decision by many to avoid bars and restaurants could further erode consumer spending and create another cascade of layoffs. The economy is likely to remain uneven and the recovery spotty until COVID-19 vaccines are widely distributed and the pandemic abates.
On Friday, Pfizer and BioNTech announced plans to seek an emergency authorization from the U.S. Food and Drug Administration for their new coronavirus vaccine. If approved, the vaccine is likely to be made available first to front-line healthcare workers, the elderly and those with underlying health conditions.
Testing showed the vaccine to be 95% effective. A safe and effective vaccine is the key to restoring public confidence and re-starting the economy, but it’s unclear how many people will get the shots.
“Filing in the U.S. represents a critical milestone in our journey to deliver a COVID-19 vaccine to the world, and we now have a more complete picture of both the efficacy and safety profile of our vaccine, giving us confidence in its potential,” Pfizer CEO Dr. Albert Bourla said in a statement.