The pandemic continues to spawn pain, death and confusion, with the economy again slumping under the impact of high unemployment and production cuts.
Yet curiously enough, many local governments in northern Arizona are faring better than expected, thanks largely to federal money in the original CARES Act. For instance, last week Apache County accepted $7 million in CARES Act money, which will bolster health department efforts to contain the virus and offset anticipated losses in sales tax revenue. Moreover, Navajo County bolstered its reserves and averted layoffs despite a drop in sales taxes, mostly as a result of CARES Act money.
Many cities in the region have also avoided deep cuts, despite a lag in sales tax revenue. For instance, Payson bolstered its reserves, boosted salaries and avoided service cuts after receiving several million in CARES Act money.
This may not last, however, since Congress has deadlocked on whether to provide additional money for states, counties, towns and schools in a second installment of the CARES Act. Democrats in the House approved nearly $1 trillion in additional help for local governments, but Senate Republicans are considering a package with very little added money for local governments.
The impasse and the growing worries about the economy come as new cases continue to surge in at least 21 states. In Arizona, new cases and hospitalizations have declined in the past two weeks, but deaths have risen, which likely reflects infections a month ago.
On the economic front, the nation’s gross domestic product shrank by 9% in the second quarter — twice the loss in the whole of the 2008 recession. On an annualized basis, this would represent a 32% reduction in GDP — unprecedented in the annals of modern record keeping.
New claims for unemployment hit 1.43 million last week, the 19th straight week with more than a million claims filed. The number filing for unemployment rose almost as much as the week before — snapping a four-week string of declines.
The numbers suggest that the sharp initial recovery after the economy reopened in May has stalled, yielding to a fresh rise in unemployment. Analysts say the surge in new cases in the quick-to-reopen states in the West and South have stalled the fledgling recovery, with future prospects increasingly uncertain.
The U.S. Bureau of Labor Statistics releases weekly national figures, but not on a county level basis. So at the end of June, the U.S. unemployment rate stood at 11% and the Arizona rate at 10% — down from more like 15% at the peak of the shutdowns nationally.
In June, the jobless rate in Navajo County stood at 13%, in Apache County at 16% and in Gila County at 9%. If the region has followed the national trend, those rates have likely risen modestly in the past month. The economies of all three counties have been hammered by a big drop in jobs in the tourism industry.
In January, the unemployment rate stood at 4.5% in Arizona, 8% in Navajo County, 11% in Apache County and 5.8% in Gila County, according to the U.S. Bureau of Labor Statistics.
However, the standoff in Congress over another pandemic relief package could complicate the economics of the pandemic.
The expanded unemployment benefit of $600 a week has expired, with the Democratic House and the Republican Senate at odds. Rep. Tom O’Halleran, a Democrat whose district includes the White Mountains and much of northern Arizona, voted for the extended benefit. Rep. Paul Gosar, a Republican whose district includes western Arizona and Rim Country, opposed it.
The $3 trillion second installment of the CARES Act already approved by the House would have extended the enhanced benefit.
On the other hand, a $1 trillion package by the Republican-controlled Senate would limit the enhanced benefit to $200 weekly, on top of the maximum state benefit of $240. It’s unclear whether the Republican package would also extend coverage to part-time and self-employed workers, not normally eligible for unemployment. Overall, the Republican package includes $100 billion in added unemployment benefits compared to $430 billion in the House version.
The $600 added benefit meant many low-wage workers made more on unemployment than they did at work. Employers complained this made many workers reluctant to return to work with the pandemic still uncontrolled in Arizona. The $200 added benefit would ensure almost everyone on unemployment is making much less than they did while working.
The Senate hasn’t voted yet on the $1 trillion package proposed by leadership, but so far Arizona Republican Senator Martha McSally has not yet declared her support for the Republican proposal and Democratic Senator Kyrsten Sinema has supported a more generous benefit.
Last week McSally cosponsored an effort to pass a one-week extension of the unemployment benefit, but Democrats balked — calling for a long-term solution. McSally has called for additional support for hospitals, nursing homes, schools, businesses and the jobless. The Senate package includes assistance in those categories, but there’s a big gap between Senate and House versions.
The House and Senate versions of a relief package are actually much further apart than they seem.
The House package includes only extensions of grants to businesses and business tax cuts. However, House Democrats included more than $2 trillion in support for state, county and local governments — plus a sizable chunk of money to help schools reopen. The Senate version offers about $123 billion in help for local governments.
About a third of the Republican package would provide benefits directly to businesses — roughly $260 billion. That compares to about $36 billion in the House package, according to an analysis in the New York Times.
Contact the writer at