Lockdowns Test the Economic Endurance of Desperate Americans

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    American workers and businesses face a months-long survival test until Covid-19 vaccines become widely available as spending plunges with record daily cases prompting a sudden return to lockdowns. More than 1 million U.S. virus cases were reported in the past week, leading states including Michigan, New Mexico and California to set tighter rules on movement and commerce. A wide swath of businesses — restaurants, hotels, retail shops, bowling alleys and theaters — will confront a devastating winter, if they are able to remain open at all. Many workers face the holidays with food and shelter in doubt. “I’m looking for a sign of life,” said Jon Forman, founder and president of Cleveland Cinemas, an operator of four independent theaters in the metropolitan area that dismissed 90% of the staff. Two locations are closed entirely and ticket sales are scant at the others, making survival less than certain: “We will not stay open through thick and thin.” Ohio Governor Mike DeWine on Tuesday set a 10 p.m. curfew, a hindrance to late-show audiences. Even if DeWine doesn’t close theaters, as Michigan Governor Gretchen Whitmer recently ordered, the business might not be able to weather the pandemic without more federal stimulus, Forman said. President-elect Joe Biden called on Congress this week to pass a $2.4 trillion bill to shore up the economy, in which more than 10 million workers will lose unemployment benefits by December, according to economists at Deutsche Bank and Evercore ISI. Programs such as the Paycheck Protection Program aiding small business have expired, and U.S. companies in the hardest-hit services sector are cutting back hours or firing workers. “The intensifying pandemic poses a serious threat to the fragile economic recovery, particularly given the fading prospects of any additional fiscal support,” said Mark Zandi, chief economist at Moody’s Analytics. “Small businesses, who are already reeling, will have trouble surviving.” Frustrated by the standoff in Washington, Colorado Governor Jared Polis on Tuesday called a special session of the legislature to provide “prompt and direct” aid to small business and families facing eviction. In Oregon, Governor Kate Brown announced the state will commit $55 million in financial assistance to businesses affected by Covid-19 restrictions. International Economist James Knightley. That could lead to a contraction of economic growth in early 2021, the first since the pandemic accelerated this spring, he said. Deutsche Bank estimates the end of unemployment benefits alone will cut U.S. growth in the first quarter by 1 percentage point. The new wave of lockdowns darkens the outlook further. This week, Philadelphia set some of the nation’s tightest safety rules to stop the pandemic’s winter surge, closing high schools, colleges and museums and ending indoor restaurant dining. Even before that, 25% of residents reported falling behind on mortgage or rent payments, and 40% who were employed when the pandemic began said they had lost their jobs or had hours or pay cut, according to a Pew Charitable Trusts poll. Almost half of those surveyed had problems paying for food. “We’ve had a huge number of people calling,” said Melody Keim, executive director of the Greater Philadelphia Coalition Against Hunger. North Bowl and South Bowl in Philadelphia, a pair of bowling alleys with restaurants that appeal to hipsters, after-work crowds and families alike, has shrunk staff to about 20 employees from 65 full-time, said founder Oron Daskal. As infections ticked up, “I told my managers not to order any food for the coming week, and not to order any alcohol until we know what’s happening,” Daskal said. What’s happening is that people are staying home, along with their money. Spending by 30 million JPMorgan Chase credit cardholders fell 7.4% in the week through Nov. 9 from a year earlier, economist Jesse Edgerton wrote in a note to clients. While many businesses — and President Donald Trump — blame shutdown orders for hurting economic growth, economists say most losses are more closely related to consumers’ fears of going out. Subscribe to our YouTube channel: https://bit.ly/2TwO8Gm Bloomberg Quicktake brings you live global news and original shows spanning business, technology, politics and culture. Make sense of the stories changing your business and your world. To watch complete coverage on Bloomberg Quicktake 24/7, visit http://www.bloomberg.com/qt/live, or watch on Apple TV, Roku, Samsung Smart TV, Fire TV and Android TV on the Bloomberg app. Connect with us on… YouTube: https://www.youtube.com/user/Bloomberg Breaking News on YouTube: https://www.youtube.com/c/BloombergQuickTakeNews Twitter: https://twitter.com/quicktake Facebook: https://www.facebook.com/quicktake Instagram: https://www.instagram.com/quicktake

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