SCOTT SIMON, HOST:
There was some encouraging news this week about the economy. Retail sales are bouncing back after a deep drop early in the pandemic. Home builders are starting to pick up steam. But at the same time, new unemployment claims are very high week after week, and tens of millions of jobless workers are in danger of losing an important part of their safety net unless Congress acts to extend it. NPR's chief economics correspondent Scott Horsley joins us. Thanks for being with us.
SCOTT HORSLEY, BYLINE: Good morning. Good to be with you.
SIMON: Let's start with consumer spending - drives the economy in so many ways. But in the context of everything else that's going on around us, how important really is that rebound in retail?
HORSLEY: It's a good sign. Overall sales in June were just above where they were a year ago. So that tells us the huge hole we saw in March and April has now been filled in. But it doesn't mean things are back to normal. You know, what people are spending money on has shifted. Spending is still way down at bars and restaurants, also gas stations - people aren't driving that much - while spending at grocery stores and home improvement stores is way up. So the big picture is still one of a country where a lot of people are kind of hunkered down. They're also buying a lot of stuff online for home delivery. Online sales are up nearly 24% from a year ago.
SIMON: Of course, we have to note, at the same time, coronavirus infections are rising in most of the country. And that has to still have an impact on the economy.
HORSLEY: Yeah, it's certainly not helping. In some of the hardest-hit states, we've now seen new restrictions imposed on bars and indoor dining, for example. A number of states have hit the brakes or even backtracked on reopening in the face of rising infections. What's more, we know even when the government doesn't dictate it, consumers tend to stay closer to home and spend less money when the news about the pandemic gets worse. If consumers spend less, businesses don't need as many workers. We're already seeing some signs that hiring has slowed. As we've said all along, Scott, we are not going to have a sustainable economic recovery unless and until we get control of this virus.
SIMON: Congress is back in session next week, and lawmakers are talking about new measures to prop up or stimulate the economy. What's on the table?
HORSLEY: There are a lot of ideas floating around. Republicans want to shield businesses from lawsuits if their workers get sick. Democrats want money to help state and local governments. The president wants a payroll tax cut, although that doesn't seem to be getting any traction. There's also some talk about another broad round of relief payments like the $1,200 that went out during the spring.
One urgent question, though, is what to do about the $600 a week in supplemental unemployment benefits that are due to run out in less than two weeks. Those payments have been a critical safety net for some 30 million people who've lost jobs. Indivar Dutta-Gupta, who's with the Georgetown Center on Poverty and Inequality, told All Things Considered if that money goes away, it's going to cause a lot of individual hardship and also be a drain on the broader economy.
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INDIVAR DUTTA-GUPTA: Families are going to face high rates of eviction, homelessness, food insecurity, hunger, going into debt, a number of other challenges. And the economy overall is going to see much slower progress in a recovery than otherwise.
HORSLEY: Without those extra unemployment benefits, we probably would not have seen those strong retail sales last month. We would have seen more defaults on car loans and credit cards, more people falling behind on their rent. There is some concern in the business community that the relatively generous unemployment benefits are discouraging people from going back to work, but that's not a really big concern when there just aren't a lot of jobs out there and when the threat of getting sick from going back to work appears to be on the rise.
SIMON: NPR's chief economics correspondent Scott Horsley, thanks so much for being with us.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.