The U.S. economy is grudgingly advancing. Economists now anticipate that our economic recovery will only slowly recover from the coronavirus pandemic. There is mounting evidence that the pandemic has cost a loss of inflicted a loss of millions of jobs forever.
The labor market has recovered about half the jobs we lost, some 11 million. The Bureau of Labor Statistics reported in September that the number of people classified as permanently losing their jobs rose to a seven-year high, 3.8 million. Gus Faucher, chief economist at PNC said, “It is very worrisome–not only for these individuals but for what it says about the recovery.”
The Wall Street Journal reported that more workers identified themselves as permanently laid off. In April 88% of those who recently lost jobs reported their firings as temporary. In September, this percentage dropped to 51%.
Economists point out that the benefits of federal aid to households are fading. Many households got up to $1,200 in one-time payments under the Care Act that ended in September.
The unemployment rate dropped to 7.9% in September. In part the decline reflected an increase in permanent layoffs and more people leaving the labor force. Dismal job prospects and childcare responsibilities have contributed to a reduced number of job applicants. The share of adults working or looking for work fell to 61.4%.
Business uncertainty has retarded hiring and new capital expenditures. In recent weeks, major companies have instituted significant layoffs. American Airlines Group and United Holdings cut 32,000 jobs. Walt Disney fired 32,000 theme park workers. All State Insurance and Raytheon Technologies have announced thousands of layoffs.
Beth Bovino, U.S. Chief Economist for S&P Global Ratings, expressed the following concerns: “A lot of businesses where those workers lost jobs are now gone…There is not as much of a punch in terms of rehiring after the opening of stores and indoor dining in many states. It is more of a gym here and there.”
Marianne Wanamaker, a labor economist at the University of Tennessee expressed concerns that the recovery will take years, not months or quarters. She said, “ We are not going to gain jobs as rapidly as we did in May and June.”
Austin Goolsbee, former economic adviser to President Obama, told CNN in an email the following: “If we are on path to only be two-thirds recovered and then have millions of businesses go under and the jobs there be lost forever, we will be years trying to back onto the path we were on before.”
Job losses ripple through the economy. People out of work stop spending. They are at risk of falling behind on car payments, credit card bills and mortgage payments.” In the aggregate, consumer non-housing debt levels–student loans, credit card, and auto loans–now approach $4 trillion, almost double 2007 levels.
Both President Trump and presidential candidate, Joseph Biden, have promised to create millions of jobs. However, lawmakers remain at odds over another potential relief bill because of differences over its scope and cost ($900 billion).
There appears to be consensus on four points: (1) direct payments to households (2) the Paycheck Protection Program-a loan designed to provide direct incentive to small businesses to keep their workers on the payroll(3) a revival of a federal add-on to state unemployment benefits, (4) renewal of aid to airlines and money to help restaurants stay open.
In baseball terms, Congress is down to their last strike. Lawmakers are scheduled to leave Washington shortly for the campaign trail. Given the fits and starts surrounding stimulus talks, skepticism about reaching a settlement appears well founded. That said, Covid-19 has unleashed so many unpredictable events. Unexpected is the normal. We need to remember Yogi Berra’s colloquialism, “It ain’t over till the fat lady sings.”
Originally published in the Sarasota Herald-Tribune
