WASHINGTON (CNN) – A resilient American labor market in May and June fueled investors hoping that a strong economic recovery could quickly fuel the country from a crippling recession that is occurring in a global health crisis. However, the July employment report slated for this week could serve as a reality check, increasing pressure on Congress to push through another round of incentives.
Higher initial unemployment benefit claims in the past two weeks have been reported as a warning sign as the health crisis worsens in several states, requiring new restrictions on movement.
“With fears of rising viruses, job losses and lower incomes, we believe that the recovery could be much more complex than the markets seem, and we think we are about to disappoint the data in the next two months. “, James Knightley, ING’s chief international economist, said in a recent note to clients.
Economists interviewed by Refinitiv predict that the US economy added nearly 1.4 million jobs last month. These gains, albeit solid, would mark a pullback compared to the increase of 4.8 million in June.
Signs of economic weakness should increase pressure on Congress to come to terms on its next stimulus package. This week is a time of crisis before the legislators’ summer break.
A key benefit – an extra $ 600 per week in assistance for jobless Americans – expired last week. Whether to renew or reduce the benefits remains an important point of contention.
Time is of the essence. Without a stop measure, Americans could see a $ 18 billion decline in revenue per week, according to Bank of America economists Michelle Meyer and Stephen Juneau. This would weigh on spending that feeds about two thirds of the United States economy.
Meyer and Juneau think lawmakers can reach an agreement earlier this month. They expect the price to reach above the $ 1.1 trillion bill introduced by Senate Republicans, but well below the $ 3.4 trillion legislation passed by House Democrats.
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