While the world’s largest economy has recovered faster than expected, there are jobs that will not recover quickly and sectors such as tourism that have been reactivated at a slower pace.
The US economy is recovering faster than expected from the pandemic recession, outpacing the most pessimistic estimates. But some areas remain in decline and there is a lot of doubt about what the recovery will look like.
How fast will the economy grow?
The International Monetary Fund estimates that United States GDP will rise 5.1% this year, following a 3.5% contraction in 2020, as the pandemic forced operations to halt. But economists believe that the rate of growth could be even higher.
The nearly $ 3 trillion in government stimulus programs last year, including a $ 900 billion measure in December, were key to the recovery of the economy. And Congress is on track to pass President Joe Biden’s 1.9 billion bailout package, which will provide greater support for businesses and families, as well as state and local jobs.
Federal Reserve (Fed) president Jerome Powell said growth could reach 6%, while analysts like Gregory Daco of Oxford Economics estimate it could exceed 7%.
The rapid recovery has raised concerns about possible price hikes, but Powell has mitigated those fears by saying inflation spikes are unlikely to continue in the coming months. The Fed has vowed to keep interest rates low until employment recovers and inflation rises above 2% for some time.
When will the job return?
As businesses were able to reopen and adapt to new covid-19 restrictions, the country recovered about half of the 20 million jobs lost in the first weeks of the pandemic.
Many of the remaining 10 million jobs are in the hardest hit service sectors, such as hotels and restaurants, and that job loss mainly affects black and Hispanic workers.
Millions more have cut their working hours or left the workforce altogether, including a large number of women taking on childcare duties.
Those jobs and hours probably won’t take on until the vaccine reaches a critical mass of Americans.
The official unemployment rate was 6.3% in January, up from 3.5% the year before. However, for black workers it was 9.2%. But when including those who are discouraged from looking for work, or with a part-time job seeking more hours, the highest rate was 11.1%.
“Help and encouragement are critical to saving Covid-contaminated waters, halting job losses … and preparing the pump for a stronger recovery once social distance measures are lifted,” said Swonk of economist Diane Grant Thornton.
For Moody’s Analytics, Biden’s incentive plan would create 7.5 million jobs this year.
Which sectors recover the fastest?
The housing market, strong before the pandemic, only paused briefly before returning to higher levels.
Sales of new and existing homes are up about 20% above pre-pandemic levels, driven by the lowest mortgage rates and the potential for more and more people to move to less crowded areas thanks to remote working.
But supply fell as homebuilders struggle to keep up with demand and drive prices up.
The processing industry has also recovered since last summer, although production remains below the start of 2020.
And while the pandemic forced consumers to cut back, they spent on automobiles, electronics, furniture, and building and garden supplies. Online retailers were the big winners, with sales up about 30% during the year.
Where does the damage persist?
The most visible impact of the recession is in the travel, hospitality and entertainment industries, which are likely to come quickly when people can travel freely and enjoy concerts, movies or plays.
But economists have warned of permanent damage. Thousands of shops and restaurants have been permanently closed and there is a risk of a wave of bankruptcy if the recovery does not come fast enough for some heavily indebted companies.
State and local governments, which typically cannot obtain loans to fund their operations, are facing the opportunity to cut teacher, police, and fire service jobs from their payroll to offset massive aid expenditures.
And homeowners and renters are currently protected by moratoriums on foreclosure and evictions, but where they go depends on what happens to their overdue rent and mortgage payments after those moratoriums expire.
“We must continue to support our citizens financially and thus bridge the end of the pandemic,” Finance Minister Janet Yellen said this week.