Tag Archives: Economy

U.S. labor market recovery stalling; second wave of layoffs underway

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell last week, but the pace of decline appears to have stalled amid a second wave of layoffs as companies battle weak demand and fractured supply chains, supporting views that the economy faces a long and difficult recovery from the COVID-19 recession.

The Labor Department’s weekly jobless claims report on Thursday, the most timely data on the economy’s health, sketched a picture of a distressed labor market even though employers hired a record 2.5 million workers in May as businesses reopened after shuttering in mid-March to slow the spread of COVID-19. At least 29 million people are collecting unemployment checks.

Stubbornly high joblessness could stifle the nascent signs of economic recovery that had been flagged by a record jump in retail sales in May and a sharp rebound in permits for future home construction. Federal Reserve Chair Jerome Powell told lawmakers this week that “significant uncertainty remains about the timing and strength of the recovery.”

The economy fell into recession in February.

“The recent sightings of green shoots for economic growth are going to fade in a hurry if workers can’t return to the jobs they lost during the pandemic recession,” said Chris Rupkey, chief economist at MUFG in New York. “Over 20 million out of work without a paycheck is a lot of spending missing from the economy.”

Initial claims for state unemployment benefits fell 58,000 to a seasonally adjusted 1.508 million for the week ended June 13, the government said. Data for the prior week was revised to show 24,000 more applications received than previously reported, bringing the tally for that period to 1.566 million.

Economists polled by Reuters had forecast claims dropping to 1.3 million in the latest week. The 11th straight weekly decrease pushed claims further away from a record 6.867 million in late March. Still, claims are more than double their peak during the 2007-09 Great Recession.

“The fear of a second wave of layoffs, as industries not directly affected by COVID-caused shutdowns have started to shed workers, appears to have begun,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.

A separate report from the Philadelphia Fed on Thursday showed labor market conditions remained depressed in June at factories in the mid-Atlantic region even as manufacturing activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware rebounded sharply.

Stocks on Wall Street were trading lower on the claims report and rising COVID-19 infections in parts of the country. The dollar rose against a basket of currencies. U.S. Treasury prices were higher.

MILLIONS ON UNEMPLOYMENT ROLLS

From manufacturing, retail, information technology and oil and gas production, companies have announced job cuts. State and local governments, whose budgets have been shattered by the COVID-19 fight, are also cutting jobs.

Economists expect an acceleration in layoffs when the government’s Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages, runs out.

They attributed to the PPP a drop in the number of people receiving benefits after an initial week of aid from a record 24.912 million in early May. But these so-called continued claims, which are reported with a one-week lag, also appear to have since stalled. The claims report showed continuing claims dropped 62,000 to 20.544 million the week ending June 6.

Initial claims covered the week during which the government surveyed establishments for the nonfarm payrolls component of June’s employment report. But economists cautioned that claims were no longer a good predictor of job growth.

The government has expanded eligibility for unemployment benefits to include the self-employed and independent contractors who have been affected by the COVID-19 pandemic, including through lost employment, reduced hours and wages. These workers do not qualify for the regular state unemployment insurance.

They must file under the Pandemic Unemployment Assistance (PUA) program and are not included in the initial claims count. Applications for PUA increased 66,063 to 760,526 last week.

A total of 29.2 million people were receiving unemployment benefits under all programs during the week ending May 30, the latest available data, down from 29.5 million in the prior period.

“Employment may rise on a net basis in June as the economy reopens and workers are recalled, but the initial claims data suggest that there is still a steady stream of new layoffs as corporations adjust to the new coronavirus reality,” said Lou Crandall, chief economist of Wrightson ICAP in Jersey City, New Jersey.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

‘This is about livelihoods’: U.S. virus hotspots reopen despite second wave specter

By Andrew Hay

(Reuters) – Facing budget shortfalls and double-digit unemployment, governors of U.S. states that are COVID-19 hotspots on Thursday pressed ahead with economic reopenings that have raised fears of a second wave of infections.

The moves by governors of states such as Florida and Arizona came as Treasury Secretary Steven Mnuchin said the United States could not afford to let the novel coronavirus shut its economy again and global stocks tanked on worries of a pandemic resurgence.

As Florida reported its highest daily tally of new coronavirus cases on Thursday, Governor Ron DeSantis unveiled a plan to restart public schools at “full capacity” in the autumn, arguing the state’s economy depended on it.

North Carolina reported record COVID-19 hospitalizations for a fifth straight day on Thursday, a day after legislators passed a bill to reopen gyms, fitness centers and bars in a state where more than one in ten workers are unemployed.

Governors of hotspot states face pressure to fire up economies facing fiscal year 2021 budget shortfalls of up to 30% below pre-pandemic projections in the case of New Mexico, according to data from the Center on Budget and Policy Priorities think tank. Nevada, which has seen cases increase by nearly a third in the past two weeks, is suffering 28% unemployment, based on U.S Bureau of Labor statistics.

“This is about saving lives, this is also about livelihoods in the state of Arizona,” Governor Doug Ducey told a news briefing, adding that a second shutdown of the economy was “not under discussion” despite official figures showing a 211% rise in virus cases over the past 14 days.

About half a dozen states including Texas and Arizona are grappling with rising numbers of coronavirus patients filling hospital beds.

Ducey and Texas Governor Greg Abbott say their hospitals have the capacity to avoid the experiences of New York, where the system was stretched to near breaking point as some COVID patients were treated in hallways and exhausted workers stacked bodies in refrigerated trailers.

‘FOOT ON THE BRAKE’

A second wave of coronavirus deaths is expected to begin in the United States in September, the Institute for Health Metrics and Evaluation said on Thursday, citing a surge in mobility since April. Its latest model projects 170,000 deaths by Oct. 1, with a possible range between 133,000 and 290,000.

A note of caution came from Utah, where Governor Gary Herbert said most of the state would pause its reopening after a 126% rise in cases over the past two weeks.

Austin, Texas on Thursday also said it would likely extend stay-at-home and mask orders past June 15 after the state reported its highest new case count the previous day. Austin health officials blamed a record week of infections on easing business restrictions and Memorial Day gatherings.

There was no talk of new shutdowns.

In New Mexico, Health Secretary Kathy Kunkel pointed to outbreaks at the Otero County Prison Facility, as well as in nursing homes and assisted living facilities, as factors behind an uptick in cases.

“It means a little bit of a foot on the brake, watch carefully for the next couple of weeks, not much in the way of major changes in what we’re doing,” said Human Services Secretary David Scrase.

(Reporting By Andrew Hay in Taos, New Mexico; Additional reporting by Brad Brooks in Austin and David Schwartz in Phoenix; Editing by Bill Tarrant and Daniel Wallis)

U.S. layoffs abate; job openings plunge

WASHINGTON (Reuters) – Layoffs in the United States fell in April, but remained the second-highest on record, while job openings dropped, suggesting the labor market could take years to recover from the COVID-19 crisis despite a surprise rebound in employment in May.

The Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS, that layoffs and discharges dropped 3.8 million in April to 7.7 million.

That was the second-highest level since the government started tracking the series in 2000. The layoffs and discharge rate fell to 5.9% in April from a record high of 7.6% in March.

The labor market was slammed by the closure of nonessential businesses in mid-March to slow the spread of COVID-19. Many establishments reopened in May, with the economy adding a stunning 2.509 million jobs last month after a record 20.7 million plunge in April, government data showed on Friday.

Despite last month’s rebound in hiring, economists warn it could take even a decade for the labor market to recoup all the jobs lost during the COVID-19 recession. The National Bureau of Economic Research, the arbiter of U.S. recessions, declared on Monday that the economy slipped into recession in February.

The NBER does not define a recession as two consecutive quarters of decline in real GDP as is the rule of thumb in many countries, instead, it looks for a drop in economic activity, spread across the economy and lasting more than a few months.

The government also reported that job openings, a measure of labor demand, declined 965,000 to 5.0 million on the last business day of April, the lowest since December 2014.

The job openings rate dropped to 3.7%, the lowest since January 2017, from 3.8% in March. Vacancies peaked at 7.52 million in January 2019.

Hiring tumbled 1.6 million to a record low of 3.5 million in April. The hiring rate plunged to an all-time low of 2.7% from 3.4% in March.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

George Floyd protests recall earlier tensions, promises of economic change

By Howard Schneider

WASHINGTON (Reuters) – In November 2015, the shooting death of Jamar Clark by Minneapolis police touched off a debate on race and economic inequality that challenged the city’s progressive image and led local corporate leaders to back efforts at better sharing the spoils of a booming Midwestern state.

Five years later, the killing of George Floyd has reopened those wounds and highlighted a growing concern nationally: The last few years of economic growth saw gains for lower-income families, but any hope for a durable narrowing of economic gaps may have been short-circuited by the coronavirus pandemic and the subsequent economic crash falling heavily on minorities.

Floyd’s death in police custody in Minneapolis last week may have been a catalyst for an anger that has spawned protests nationwide, but it was in effect the third major shock to hit in as many months, said Tawanna Black, chief executive of Minnesota’s Center for Economic Inclusion (CEI), a group that grew out of those corporate promises of five years ago.

Before the recent surge in joblessness, “we saw the employment gap closing rapidly,” Black said. But “you were connecting people to low-wage jobs, and now you have displaced them. … What I am hopeful of is that we not just solve for criminal justice, but what’s required to get economic and social justice.”

It is complex, to be sure. Tension over police treatment of blacks has simmered through good economic times and bad. But for the economy, the course of the pandemic and the financial fallout highlights how little has changed over a decade of growth that seemed to hold out at least the possibility of progress on narrowing racial economic divides.

Median family income growth finally started rising in 2015, but median family income for blacks remains about 61% that of whites. In Minneapolis, it is even lower at about 44%.

A 2009-2020 bull market for stocks and rising home values have done little to improve overall wealth among African Americans, who comprise around 13% of the U.S. population but account for 4.2% of household net worth, according to Federal Reserve data. The figure in 1989 was 3.8%.

For Hispanics, it is even worse, with more than 18% of the U.S. population holding just 3.1% of household wealth.

(Graphic: Race gaps persist – )

‘NO PROGRESS’

Both groups have suffered an outsized blow from layoffs triggered by business closures meant to control the spread of the coronavirus and the crash in demand among consumers holed up

at home.

According to federal data from February to April, Hispanic employment fell by more than 25%. For blacks, the figure was 17.6%, more modest but still above the 15.5% for whites.

It is part of a “last-hired, first-fired” dynamic familiar to labor economists and considered one of the reasons behind the lack of progress in narrowing wealth and income gaps. In this case, it is also driven by the skewed nature of the coronavirus economic shock, which hit hardest among lower-paid service jobs in the restaurant and hospitality industry where minorities form a larger share of the workforce.

The shock has been no different in Minnesota from in parts of the Deep South, according to a Reuters comparison of federal employment data by race alongside demographic information on unemployment claimants submitted by the state in April.

African Americans made up about 5.7% of Minnesota’s employed workforce in 2019 but more than 8% of those who filed for unemployment in April.

Still predominantly white, with a self-effacing culture captured by writer Garrison Keillor’s “Prairie Home Companion” former radio show, the demographics around Minneapolis, the state’s largest city, have shifted quickly in recent decades. It

has for example opened itself to refugees from Somalia. The city is now about 20% black and 10% Hispanic.

Minnesota’s rural areas voted heavily in 2016 for Republican Donald Trump, while the state as a whole went for Democrat Hillary Clinton owing to strong support in the Minneapolis area.

That city is also home to a healthy list of large U.S. companies, many of them homegrown national brands like Target Corp, that are known for their civic boosterism and support for efforts like the one spearheaded by CEI’s Black.

The question now is whether the dislocation caused by the coronavirus, rising joblessness and the death of Floyd prompts lasting change.

Those firms will be central to deciding the pace of the economic recovery, and the nature of the jobs available in the economy that emerges.

After the last recovery did so little to change wealth and income dynamics, and the coronavirus showed the gulf between workers who were buffered from the crisis and those who were not, Black said it was time to think about the nature of the labor market that will emerge from here.

Many of the jobs “will not come back. Do we train people for tech jobs? Automation-resilient jobs?” she said. Over the last decade, “we made no progress.”

(Reporting by Howard Schneider; Editing by Dan Burns and Peter Cooney)

Retailers already hit by coronavirus board up as U.S. protests rage

By Jessica Resnick-Ault

NEW YORK (Reuters) – Target Corp and Walmart said on Sunday they shuttered stores across the United States as retailers already reeling from closures because of the coronavirus pandemic shut outlets amid protests that included looting in many U.S. cities.

Protests turned violent in places including New York and Chicago following the death in Minneapolis of a black man, George Floyd, seen on video gasping for breath as a white police officer knelt on his neck.

In Los Angeles, protests led to the looting of the Alexander McQueen clothing store on Rodeo Drive, and a Gucci store on the vaunted strip was marked with the graffiti slogan: “Eat the rich,” according to local media reports.

In the nearby Grove Shopping Center, which houses 51 upscale stores, Nordstrom, Ray Ban and Apple were broken into. Nordstrom Inc temporarily closed all its stores on Sunday, it told Reuters in an emailed statement.

“We hope to reopen our doors as soon as possible,” the statement said. “We had impacts at some of them and are in the process of assessing any damage so we can resume serving customers.”

Apple Inc said in an email statement it also had decided to keep a number of its U.S. stores closed on Sunday. The company did not specify how many stores were closed, or if the closures would be extended.

The violence was widespread, and Minnesota-based Target said it was closing or limiting hours at more than 200 stores. It did not specify how long the closures would last.

The company told Reuters it was beginning to board up its Lake Street store in Minneapolis, near where Floyd was killed, for safety and to begin recovery efforts. The company said in a statement that it would plan to reopen the store late this year.

“There is certainly potential for the resulting social unrest to hurt certain businesses like retailers and restaurants, and for it to further dent consumer and business sentiment,” said Robert Phipps, director at Per Stirling. “It is even possible, particularly if the unrest continues and spreads, that it would, all other things being equal, have a significant impact on investor psychology and the markets.”

Walmart closed some stores in Minneapolis and Atlanta after protests Friday, and closed several hundred stores at 5 p.m. on Sunday, a spokesman said. “We’ll look at them each day, and at how each community is impacted and make decisions then,” the spokesman said.

Online retailer Amazon said it was monitoring the situation closely. “In a handful of cities we’ve adjusted routes or scaled back typical delivery operations to ensure the safety of our teams,” the company said in an emailed statement.

U.S. retail sales have posted record declines as the novel coronavirus pandemic kept Americans at home, putting the economy on track for its biggest contraction in the second quarter since the Great Depression in the 1930s.

(Reporting by Jessica Resnick-Ault; Additional reporting by Sinead Carew and Ismail Shakil; Editing by Chizu Nomiyama, Peter Cooney and Diane Craft)

NY Fed’s Williams says it’s hard to know what shape U.S. economic recovery will take

NEW YORK (Reuters) – The U.S. unemployment rate is likely to get worse before it gets better, and it is difficult to know what the economic recovery will look like, New York Federal Reserve Bank President John Williams said Thursday.

The most recent economic figures do not fully capture the pain American families are going through, since some people who stopped working for health reasons or to care for a family member may not be counted, Williams said in remarks prepared for a webinar organized by business groups based in upstate New York.

The unemployment rate, which surged to 14.7% in April, “is sure to get worse before it gets better,” Williams said.

As businesses begin to reopen, there will be more information on the economic toll of the virus on various industries and how long it could take the economy to rebound, he said.

“What we don’t know is what the shape or timescale of the recovery will be,” he said. “It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services.”

The Fed acted quickly to shore up the U.S. economy in March as the coronavirus spread. Policymakers cut rates to near zero and rolled out a slew of emergency lending facilities intended to keep credit flowing to businesses and households. The Fed also launched into open-ended asset purchases, including Treasury securities and mortgage-backed securities, to improve market functioning.

Williams said rates will stay low until policymakers are “confident” that the economy is stable and on track to reach the Fed’s maximum employment and price stability goals.

“Amid all the change we’re experiencing, you can be assured of one thing: our unwavering commitment to limit the economic damage from the pandemic and foster conditions for a strong and sustained recovery,” he said.

(Reporting by Jonnelle Marte; Editing by Chizu Nomiyama)

What you need to know about the coronavirus right now

(Reuters) – Here’s what you need to know about the coronavirus right now:

Back on the road

The U.S. auto industry is slowly returning to life with assembly plants scheduled to reopen on Monday and suppliers gearing up in support as the sector that employs nearly 1 million people seeks to recover from the coronavirus pandemic.

General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) all have been preparing for weeks to reopen their North American factories in a push to restart work in an industry that accounts for about 6% of U.S. economic activity.

The reopening will be a closely watched test of whether workers across a range of industries can return to factories in large numbers without a resurgence of infections.

Hitting new lows

Japan’s economy became the world’s largest to slip into recession after the pandemic, first-quarter data showed on Monday, putting the nation on course for what could be its deepest post-war slump.

The GDP numbers underlined the broadening impact of the outbreak, with exports plunging the most since the devastating March 2011 earthquake as global lockdowns and supply chain disruptions hit shipments of Japanese goods.

But analysts warn of an even bleaker picture for the current quarter as consumption crumbled after the government in April requested citizens to stay home and businesses to close.

China on alert for new wave

While much of the rest of the world is experimenting with easing restrictions, one Chinese province is back in a partial lockdown after a spate of infections.

Jilin in the northeast reported two more confirmed cases over the weekend to take its total number of new infections to 33 since the first case of the current wave was reported on May 7. Separately, the financial hub of Shanghai reported one new locally transmitted case for May 17, its first since late March.

Pop-up carparks

Australia’s most populous state New South Wales encouraged its residents to avoid peak-hour public transport as it began its first full week of loosened lockdown measures, which saw people heading back to offices.

To help with maintaining social distancing, extra bicycle lanes and pop-up car parking lots will be made available, officials said.

“We normally encourage people to catch public transport but given the constraints in the peak…, we want people to consider different ways to get to work,” state premier Gladys Berejiklian told reporters in Sydney.

Furloughs no cure-all

Temporary unemployment schemes have spread far wider and faster than during the 2008-2009 global financial crisis, but are not likely to save jobs in sectors which face a tougher recovery post-pandemic, such as leisure and tourism.

These schemes, which typically provide at least 80% of pay for workers for whom there is no work now, mean companies do not face firing and potential re-hiring costs. Workers are more inclined to keep spending and so help prop up the economy.

“If it’s more than a year, you need other solutions and will need other policies like retraining,” said Gregory Claeys, senior fellow at economic think-tank Bruegel. “It’s good in a lockdown, but if there is more social change, you need alternatives.”

(Compiled by Karishma Singh and Mark John; Editing by Mark Heinrich)

U.S. companies discover the dark side of a COVID-19 business boom

By Timothy Aeppel

(Reuters) – Kevin Kelly has discovered the many ways a deadly pandemic can be both a boom and a burden on some U.S. businesses.

As the nation clamped down with stay-at-home orders, Kelly said his company, Emerald Packaging Inc. in Union City, Calif, saw demand for the factory’s output explode. Emerald churns out plastic bags for produce, like baby carrots and iceberg lettuce, and Kelly attributed the growth, in part, to the perception that packaged produce is a safer alternative to unwrapped items.

Emerald represents the other side of the current novel coronavirus crisis, which has seen unemployment surge to levels not seen since the Great Depression. The jobless rate hit 14.7% in April. While many companies face a slump, some are rushing to add workers, including delivery services like Instacart. A recent survey by the Atlanta Fed concluded there have been three jobs added to the U.S. economy for every 10 layoffs.

Eric Schnur, CEO of specialty chemical maker Lubrizol Corp., owned by Warren Buffett’s Berkshire Hathaway Corp, said he anticipates “many millions in extra costs associated with responding to COVID-19.” Lubrizol’s business boom includes a three-fold increase in its output of the gelling agent used to make hand sanitizer.

Schnur said the extra costs go beyond stepped up cleaning and safety equipment and includes “significant increases in supply chain and logistics costs as we work to get our materials to those who have the greatest need.”

Another company facing added costs is Calumet Electronics Corp., in Calumet, Mich., which said it has spent $80,000 on everything from soap to mobile desks to keep workers safe through the crisis. For more on Calumet, click here:

For Emerald, orders surged 150% in March and were up another 7% in April. But there’s a dark side to that surge, both in terms of cost and complexity.

All the steps the company has taken — both to boost output and keep workers safe — are expected to add at least $350,000 to costs by the end of the year. This doesn’t include the lost production time, which adds up to at least an hour each day, that machines have to be shut down for cleaning. Kelly, Emerald’s chief executive officer, said he hasn’t figured out what this will do to his profits, but he expects a big hit to his margins. Emerald is a family-owned business with annual sales of about $85 million.

One of the biggest costs for Emerald was $50,000 Kelly spent on an automated temperature scanner. When the crisis first hit, Emerald implemented a regimen that included workers getting their temperature taken at the start and end of each shift.

But Kelly soon realized there was a problem having 40 people at the start of each shift waiting to be checked, one by one, by someone standing close to each employee as they were screened.

“It also just isn’t comfortable,” he said. “You know it’s a temperature gun, but you basically are holding a gun up to someone else’s head. It just made everyone uncomfortable.”

The new system will be a scanner that flashes a red warning signal if someone walks by with a body temperature over 100.4 degrees.

COVID-RELATED COSTS

Another big-ticket item is the cleaning, which accounts for $75,000 of the added costs. This includes assigning six workers — two on each shift — to constantly scrub and sanitize surfaces and $10,000 for six backpacks that these workers now use to hose floors with cleanser. The company, which was founded in 1963 by Kelly’s father, has added 10 workers to its staff of 240 and is heaping on overtime as well to get the orders out the door.

Even the company’s rag bill exploded. They used to buy 2,000 rags a week. Now it’s 7,000. The cost of that one item has jumped from $300 a month to $1,000, while disposable glove use has tripled.

Michael Rincon, Emerald’s director of operations, says each week brings new twists. For instance, they’ve discovered that having workers constantly wiping surfaces with isopropyl alcohol erodes signs and buttons — but they only realized that after it was too late. On one machine in the factory, the word “danger” printed in bright red has blurred.

Rincon said the faded labels will be repainted. But he’s also had to replace buttons on machines that have had the lettering rubbed away. The cost of a new button isn’t much, but the repairs mean costly shutdowns on lines that run around the clock. Some buttons can be replaced in a few minutes, but others take longer, said Rincon.

Kelly said he even thought about trying to put through a price increase to offset some of these expenses. But a few weeks ago, his biggest customer let him know that was a non-starter. The customer told Kelly he was going to see who else might be able to supply him with produce bags, presumably at a better price.

Besides the costs, there are also plenty of unpredictable management challenges. The company made masks mandatory eight weeks ago, at the very beginning of the crisis, but Kelly and other managers still find workers in the plant who aren’t wearing them or are wearing them incorrectly.

One problem is the nature of their factory, which is dominated by large, noisy machines. The only way to communicate in many parts of the factory is to lean your head right next to your coworker. “I’m constantly walking through the factory — throwing my arms apart — to remind people,” said Kelly.

Emerald has had three false alarms, with workers either calling in sick or falling sick at work and being sent home. However, none tested positive for COVID-19, the illness caused by the novel coronavirus.

Kelly said that in a country that regulates so many things, there’s still no good government guidance beyond general guidelines.

“The toughest thing is that there isn’t much direction from the state or the federal government,” Pallavi Joyappa, Emerald’s chief operating officer, said. “You are kind of making it up as you go along.”

(Reporting by Timothy Aeppel; editing by Diane Craft)

‘There is a real risk’ of new outbreak if U.S. states reopen too soon: Fauci

By Makini Brice and Richard Cowan

WASHINGTON (Reuters) – Leading U.S. infectious disease expert Anthony Fauci on Tuesday warned Congress that a premature lifting of lockdowns could lead to additional outbreaks of the deadly coronavirus, which has killed 80,000 Americans and brought the economy to its knees.

Fauci, director of the National Institute of Allergy and Infectious Diseases, told a U.S. Senate panel that states should follow health experts’ recommendations to wait for signs including a declining number of new infections before reopening.

President Donald Trump has been encouraging states to end a weeks-long shuttering of major components of their economies. But senators heard a sobering assessment from Fauci, when asked by Democrats about a premature opening of the economy.

“There is a real risk that you will trigger an outbreak that you may not be able to control and, in fact paradoxically, will set you back, not only leading to some suffering and death that could be avoided but could even set you back on the road to try to get economic recovery,” Fauci said.

The COVID-19 respiratory disease caused by the new coronavirus has infected more than 1.3 million Americans and killed more than 80,600.

Fauci, a member of Trump’s coronavirus task force, told the Senate Health, Education, Labor and Pensions Committee that the nation’s efforts to battle the deadly virus and the COVID-19 disease it triggers should be “focused on the proven public health practices of containment and mitigation.”

Fauci, 79, testified remotely in a room lined with books as he self-quarantines after he may have come into contact with either of two members of the White House staff who were diagnosed with COVID-19. He noted that he may go to the White House if needed.

“All roads back to work and back to school run through testing and that what our country has done so far on testing is impressive, but not nearly enough,” Lamar Alexander, the Republican chairman of the Senate committee, said in an opening statement to Tuesday’s hearing.

Alexander is also self-quarantining in his home state of Tennessee for 14 days after a member of his staff tested positive. Alexander chaired the hearing virtually.

Democrats on the health committee largely concentrated on the risks of opening the U.S. economy too soon, while Republicans downplayed that notion, saying a prolonged shutdown could have serious negative impacts on people’s health and the health of the economy.

Trump, who previously made the strength of the economy central to his pitch for his November re-election, has encouraged states to reopen businesses that had been deemed non-essential amid the pandemic.

His administration has largely left it to states to decide whether and how to reopen. State governors are taking varying approaches, with a growing number relaxing tough restrictions enacted to slow the outbreak, even as opinion polls show most Americans are concerned about reopening too soon.

Senator Patty Murray, the senior committee Democrat, criticizing aspects of the administration’s response to the pandemic, said Americans “need leadership, they need a plan, they need honesty and they need it now, before we reopen.”

Others testifying on Tuesday included U.S. Centers for Disease Control and Prevention Director Robert Redfield, Assistant Secretary for Health Brett Giroir and Food and Drug Administration Commissioner Stephen Hahn. Each testified remotely.

Meanwhile, House Majority Leader Steny Hoyer, a Democrat, told reporters that a Democratic bill to provide significant new federal aid in response to the coronavirus pandemic could be unveiled later on Tuesday, with a possible House of Representatives votes on it on Friday.

(GRAPHIC: Tracking the novel coronavirus in the U.S. – https://graphics.reuters.com/HEALTH-CORONAVIRUS-USA/0100B5K8423/index.html)

(Reporting by Richard Cowan, Makini Brice, Doina Chiacu and Tim Ahmann; Editing by Scott Malone and Alistair Bell)

Factbox: U.S. COVID-19 tests – What’s out there and how well do they work?

By Carl O’Donnell

(Reuters) – Health policy experts say the United States must dramatically increase the availability of tests for the coronavirus if it is to safely reopen its economy.

U.S. regulators have moved speedily to authorize many new tests, but concerns still remain about tests’ accuracy, and some policymakers say new testing technologies need to proliferate to fully contain the virus.

MOLECULAR DIAGNOSTIC TESTS

Molecular diagnostic tests show who has contracted the virus. Most rely on samples collected from patients using nasal swabs. The samples are then analyzed using a method called polymerase chain reaction (PCR), which detects viral RNA. These tests can be highly accurate, in some instances detecting the virus in 95% of cases.

The first diagnostic tests to get U.S. regulatory approval required that a sample be shipped back to a laboratory to be analyzed, slowing the speed at which patients could receive results. More recently approved diagnostic tests can be conducted at the same location where the sample is taken and provide results in minutes.

Examples:

– Roche Cobas SARS-CoV-2

Authorized for use by U.S. regulators in March, Roche’s website says it is currently shipping around 8 million tests per month. It requires a sample taken by nasal swab be sent back to a lab for analysis. Roche says studies show it can detect very low levels of the virus with 95% accuracy.

– Abbott ID Now

Approved in late March, Abbott’s rapid, point-of-care molecular diagnostic test can provide results on-site to patients within minutes. As of May 4, Abbott said it is producing 50,000 of these tests per day, and plans to ramp up to 2 million by June. A study conducted by the Cleveland Clinic showed the test detected the virus in around 85% of cases.

ANTIGEN TESTS

Earlier this month, U.S. regulators authorized the first antigen test, a new category of diagnostic test. This type of test scans for proteins that can be found on or inside of a virus. They test samples taken from the nasal cavity using swabs. Antigen tests can detect the virus very quickly and can potentially be produced at lower cost.

The U.S. Food and Drug Administration says antigen test production can potentially scale to millions per day. But they produce false negatives at a higher rate than molecular diagnostics tests.

Examples:

– Quidel Corporation Sofia 2 SARS Antigen FIA

Authorized for use earlier this month, Quidel said the test picks up around 80% of COVID-19 cases.

ANTIBODY TESTS

Antibody tests take small samples of patients’ blood and scan them for antibodies, which the immune system produces in response to a virus. They can be conducted in labs or through on-site tests that provide results in minutes.

Antibody tests, also known as serological tests, are not as effective as molecular diagnostic tests in catching COVID-19 at early-stages, when patients may not yet be producing antibodies. But they can confirm if patients previously had the virus and have antibodies that might protect them against future infection.

The FDA recently tightened rules on serological test developers after a proliferation of unauthorized tests raised questions about their reliability. Researchers have not confirmed whether recovered patients who are producing antibodies are fully immune to COVID-19.

Examples:

– Abbott Architect SARS-CoV-2 IgG Assay

Researchers at the University of Washington School of Medicine say the test, which Abbott launched in April, has a specificity of 99.9% and a sensitivity of 100%, suggesting very few false positives and no false negatives. Abbott has already shipped more than 10 million antibody tests to hospitals and labs.

(Reporting by Carl O’Donnell; Editing by Lincoln Feast.)