As virus rages, US economy struggles to sustain a recovery

As the economy recovers from the pandemic, home sales are booming, stocks are setting record highs yet the US economy is nowhere close to what it was pre-pandemic with high unemployment, low consumer confidence and less consumer spending. The virus outbreak is still raging and the Congress is deadlocked over providing more relief to the US citizens. 
According to the article, roughly 1 million new Americans are applying for unemployment benefits every week. Economists say that as many businesses have reopened and consumers have begun shopping and spending more, the picture is beginning to brighten, if only fitfully. Most say the economy is growing again. Yet scars are sure to remain from the catastrophic April-June quarter, when, according to the government, the economy collapsed at a 31.7% annual rate.
Some industries, notably those involving travel and hotels and restaurants, could struggle for years. And while the number of confirmed viral infections has been declining, the threat of a major resurgence remains, especially as students increasingly return to schools and colleges.
In a survey released last week by the National Association for Business Economics, two-thirds of the economists said that they thought the U.S. economy remains in recession. Nearly half said they didn’t expect it to return to pre-pandemic levels until mid-2022. Eighty percent put the likelihood that any recovery will give way to a “double-dip” recession at 25% or more.
Do you think we are still recession or recovering out of it? How long will it take for the US economy to recover?
https://www.nbcnews.com/business/economy/virus-rages-us-economy-struggles-sustain-recovery-n1238693

Unemployment Claims Have Reached Historic Levels

    Since March, the United States' economy has experienced extremely high levels of unemployment. This is of course a direct result of the ongoing global pandemic caused by the spread of the coronavirus (COVID-19). Jobless claims record before the pandemic reached around 700,000 which is a significantly low number given that there are approximately 162 million total jobs in America. These numbers have increased to 7 million in March when the virus' spread was at a peak and continuously increased during the past consecutive weeks. As of last Thursday, August 27, 1 million more americans have filed for employment bringing the number of claims to a high 14.7 million according to the Department of Labor.

This is a step back as "the rise comes after two straight weeks of declines and brings the number above the 1 million mark as the nation continues its slow recovery from the effects of COVID-19." This data amplifies how troubled and devastated the U.S. economy has been due to the ongoing public health crisis which is clearly weighing on economic activity, inflation, as well as employment/unemployment. With the re-opening of businesses, this is quite deplorable. The question now stands in whether the job market and the economy will quickly rebound and if a recovery is on sight or long awaited.

 

For Those About to Graduate, We Salute You

As March rolls into April and the last month of our college career begins, we soon-to-be graduates face some tough choices. Not that these decisions differ all that greatly from those faced by other classes, we just have to make them under somewhat extenuating circumstances. Even with the green chutes of recovery beginning to appear we face the toughest job market in decades, and it doesn't look like it's going to be any better come May 9. I know, I know, we don't want to be reminded, but let's face it - it's not only ours, but the nation's 800 pound gorilla.

As Derek Thompson writes in a recent article in The Atlantic, this may be the mother of all jobless recoveries. His piece serves as commentary on a Cleveland Fed report entitled "Are Jobless Recoveries the New Norm?", which takes a look at why, in spite of modest signs of recovery, unemployment still lingers at 9.7%. The report's author, Murat Tasci, postulates that the recession we are currently climbing out of is much more similar to the previous two that to those before, especially in the fact that pain in the labor market remained for some time after the initial downturn. Fewer new jobs were created or regained leading to longer spans of unemployment for those who lost jobs during the recession.

As one would expect, after two quarters of positive GDP growth this economy is no longer hemorrhaging jobs, but it is failing to create them. Increased demand, hailed as the savior of the labor market by many, will not be so this time around because of the huge amount of slack in the market. As firms begin seeing business pick up they will begin adding more work hours courtesy of their already grossly underemployed staff. The average work week currently stands at 33.1 hours and the number of individuals working part-time (not by choice) has jumped by 4.1 million since December 2007.

The real kicker, though, is that according to the Fed, nearly 95 percent of the change in the unemployment rate is due not to jobs lost, but jobs not found. "During the past three recessions, the decline in the job finding rate has been playing a bigger role in unemployment rate fluctuations. Relative to the change in separations, the job finding rate changed (declined) much more in the past three episodes," writes Mr. Tasci.

There is at least one light at the end of the tunnel, however. Once the economy recovers enough that baby boomers' wealth returns, they'll begin retiring in droves. Maybe this will give the country the empty jobs it needs to make up for the past few decades' loss, and us the opportunities we need to move ahead.