Do people fully appreciate the economic implications of the new Covid-19 surge? And how it interacts with policy? It's pretty grim 1/

What we're seeing in the Sunbelt is a failed reopening; whatever job gains there have been from the end of lockdown will now stall and maybe go into reverse, and the virus will weigh on the economy for a long time 2/

What makes this especially problematic is that GOP policy — both Trump and McConnell — has been based entirely on assuming that jobs will come roaring back. No need to extend special unemployment benefits; no need to aid state and local govts 3/

If the jobs don't come roaring back, which they won't, cutoff of benefits and failure to provide aid become huge problems. The economy has been ugly, but cld have been much uglier — and is set to become so unless there's very quick action 4/

Case in point: wage and salary income fell $800 billion (at an annual rate) between Feb and May, but this was more than offset by $1.2 trillion in unemployment benefits. This kept lockdown of contact-intensive sector from spilling over into a much wider slump 5/

But expanded benefits are set to expire at the end of next month, and for technical reasons will actually vanish for most workers on 25 July. There was supposed to be OK bc of a rapidly recovering economy — but the failure on virus control means slow recovery instead 6/

In effect we're set to impose devastating austerity on an economy not remotely ready to handle it — and to head that off we'd need major policy action in *less than a month*. With the White House still in denial, what are the odds of that happening? 7/