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By Howard Schneider

WASHINGTON, Oct 8 (Reuters) – U.S. hiring last week remained sluggish, retail foot
traffic dipped, and a surge in coronavirus cases across
the Upper Midwest even dented what had been a carefree rush back to restaurants.

The outbreaks in states like South Dakota, Montana and Wisconsin are the
latest in the country’s carousel battle with the pandemic as
hotspots rotate from one region to another, preventing any broad recovery of confidence
or the economy.

Since an early summer jump in U.S. economic activity, data across
a broad set of high-frequency indicators has shown little evidence of the sort of steady improvement needed for the country to dig out from a deep recessionary hole, with more than 25
million people still filing for some form of unemployment insurance.

Employment over the week fell slightly at a set of small businesses whose worker time is managed by Homebase website
new job postings monitored by Chmura website Economics also declined, and shifts worked at a broad set
of industries flatlined according to time management firm UKG
website

Across key sectors whose recoveries may dictate any sustained further fall in U.S.
joblessness, the news is not good heading into what should be a
prime time of the year for commerce.

“The retail, food service, and hospitality sector, there has been exactly no growth at all for the last five weeks – a noteworthy trend on the eve of the holiday shopping season,” said Dave Gilbertson, UKG’s vice president of strategy and operations.
He cited “a lack of confidence across several key areas by most businesses, including the direction of the COVID-19 pandemic and whether consumer activity will warrant increased staffing.”

Economists at the Indeed Hiring Lab also noted a slow start to holiday hiring that traditionally
accelerates in September. Seasonal job postings are currently about
11% below last year.

That’s one more drag on top of several the U.S. economy is facing – foremost the persistent
spread of the coronavirus. The seven-day moving average of new cases
is heading back toward 50,000, and for daily deaths it is lodged at
just above 700.

Even as some regions have managed to tamp down caseloads and progressively reopen their
economies, the virus has popped up elsewhere, be it the high-profile
hotspot centered around President Donald Trump’s White
House or a rapid outbreak in states in the Midwest whose sparse
populations would seem to provide a buffer.

Cellphone data from Unacast website shows how that, at the margin, dents any national rebound.

Foot traffic to restaurants in South Dakota, for example, surged over the summer
at times reaching 40% above year-ago levels; as the virus surged there this fall, it
has fallen back roughly in line with 2019.

That still is far above restaurant activity nationally:
Data from reservation site OpenTable website show the numbers of seated diners remain about 50% below last year.

But it is evidence of what Gregory Daco, chief U.S. economist with Oxford
Economics, deemed a “stuck-in-the-mud” recovery that, at the national level, is never fully clear of the weight
of the virus on confidence and activity, and now faces the
loss of government spending support that had boosted personal incomes over the summer.

Talks between the White House and the leadership of the Democratic-led U.S.

House of Representatives over another pandemic aid package
collapsed this week, dimming hopes that ailing businesses and
households would get fresh stimulus soon.

An Oxford website recovery index fell this week and has remained stuck at
around 20% below the pre-pandemic level.

Retail traffic data from Safegraph website also fell slightly this week, while new claims for
unemployment insurance for the week ended Oct. 3, at 840,000, showed
little change from the week before.

That’s a discouraging sign to economists comparing the economy’s not-inconsequential improvement in some
areas with the massive gap still left in the labor market.

Some industries like housing and manufacturing continue to rebound,
and estimates of U.S. gross domestic product have generally moved higher.
A New York Fed website estimate of GDP growth for the next 12 months for example continues to
rise, from a low that showed the economy shrinking 11.5% given conditions as of late April, to a decline of less than 4.2% given current conditions.

But improvement in the job market seems turgid, with the pain falling heaviest on low-income families who are also coping with the
loss of federal unemployment benefits.

The cooler months, JPMorgan economist Jesse Edgerton noted,
will pose “difficult choices” between moving activities
like restaurant dining back indoors and risking new viral spread, or cutting them out
and slowing the recovery.

In the scenarios economists are now using to frame their forecasts, the combination of persistent disease and declining government support adds up to the bad one.

“How the virus plays out, how policy plays out … There’s a downside risk scenario that the improvement stalls out,” with the unemployment rate lodged at
around 8%, roughly where it is now, said Karen Dynan, a Harvard University economics professor and senior fellow at the Washington-based Peterson Institute for
International Economics.

“If we don’t get much more fiscal stimulus, don’t have a safe vaccine, damage from business failures and the scarring of households that have suffered – that is where we end up.”

(Reporting by Howard Schneider Editing by Paul Simao)

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