The acceleration in the number of Covid-19 patients in the USA is worrying. It diverges from the observation made in Europe and should cause a further upward adjustment of American unemployment. A new lockdown is looming.
The health situation is changing very quickly in the United States. The number of confirmed infected people has re-accelerated frankly since mid-June. This movement is in complete opposition to what is happening in Europe where there is no acceleration. The recent divergence is impressive (see the graph).
Until mid-June, the behavior of the USA was consistent with that of European countries, but the exit of the confinement, probably too rapid, is again reflected in a sharp increase in confirmed patients.
This change in pace is also reflected in an acceleration in the number of deaths in the USA. The rupture is impressive during the day of June 25. This acceleration is not observed in Europe. The number of deaths will further increase in the coming weeks, given the shape of the contaminated curve.
The point of concern is that the deterioration of the health situation in the United States in March had caused a rupture in the labor market. It was in the week ending March 21 that the weekly jobless claims had increased dramatically.
In a post in March (The biggest break in the American economy?), I said that the acceleration of weekly unemployed registrants was consistent, state by state, with the number of infected patients. The increase in the number of infected people had led to a downward adjustment in employment.
This can be seen in the graph below. The increase over one week in the number of confirmed infected patients is consistent with the profile of those registered as unemployed (insured unemployment).
One can fear that with the acceleration noted on the number of patients since mid-June, we witness a new upside adjustment on the US unemployment. This would translate into an upward jump in the unemployment rate, forcing a new lockdown. This will not fail to create additional tensions in American society. This will not be conducive to a robust economic recovery.