Since the Covid-19 outbreak, any kind of economic recovery seemed far off into the future. Millions of Americans started claiming welfare for the first time. The virus continued to spread, infecting more people in its path. Only at the end of May did states cautiously start to reopen. So, as millions were hunkering down for the long haul, it was a surprise when early signs of economic recovery appeared in June.
Does this glimmer of hope imply the end of financial hardship for us all? Or, do we still face economic uncertainty in these unpredictable times? These are the big questions this article aims to answer.
Early Signs of Economic Recovery
In March, the coronavirus and lockdowns hit the US economy like a wrecking ball — undoing all progress made since the Great Recession of 2008. The Bureau of Labor Statistics (BLS) published its official report on June 5. It shows that in April, the jobless rate hit 14.7 percent in the US. But, the stats for May show some signs of economic recovery. Around 2.5 million jobs were created in May — bringing the unemployment rate down to 13.3 percent.
Many of the jobs created are in the industries that were hardest hit by Covid-19. The rise in employment was in the following areas:
- Leisure and hospitality
- Healthcare services
So, good news if you work in the leisure and hospitality sector. But there are still over 20 million jobless folks. If you’re stuck at home on furlough, struggling on welfare, scraping by on benefits, and worried about the end of rent moratoriums — the glimmer probably doesn’t do much to inspire confidence.
Of course, governments around the world are still facing a dilemma. On the one hand, they need to stem the spread of Covid-19 and ensure health systems can cope. On the other hand, protecting the economy from a steep recession is vital.
Signs of Economic Recovery — But Not for All
Unfortunately, the seeming upturn in the economy during Covid-19 isn’t across the board. The official jobless figures showed that any recovery — albeit minor — hasn’t benefited black workers. During May, the black unemployment rate went up by 0.1%. While not much, it highlights the inequality between black and Hispanic workers and white workers.
But digging deeper into the figures reveals that the flickering glimmer hope of economic recovery might not be as bright as everyone thinks.
For example, the official government figures only included people working or actively seeking work. Therefore, anyone who’s given up looking for a job in May isn’t included. Also, part-time workers without benefits are not counted either. These facts mean that the real rate is a few percentage points higher.
According to some reports, miscalculations in the way the BLS determines jobless people don’t give an accurate picture. The actual unemployment rate is probably over 16 percent — with some saying it’s as much as 21 percent. Also, jobless rates among black workers could be as high as 30 percent.
The Hope for an Early Recovery During Covid-19
No one knows how long the coronavirus pandemic will last. So, it’s difficult to predict how quickly any economic recovery from Covid-19 will take. But many analysts hope that any recession is short-lived.
The International Monetary Fund (IMF) produced a report on how quickly any economic recovery takes place. Unlike recessions in the past, the collapse of the economy in 2020 took place rapidly. In the space of a few months, millions of people became jobless or were on temporary leave. As businesses gradually reopen, people should return to work fairly quickly.
Three factors make the Covid-19 crisis different from other pandemics in the past:
- Healthcare — Medicine is more advanced and can respond faster to a health crisis. Because of this, the final death toll from Covid-19 will probably be lower than previous major pandemics.
- Who Covid-19 affects — The virus tends to affect elderly folks rather than the young. This means that the economy should recover faster as more people can re-enter the labor market when jobs are available.
- Stimulus packages — The government has distributed a record amount of cash to support affected people and bolster the economy. This money will lessen any impact Covid-19 produces and help the economy recover faster.
Stimulus Packages to Assist Economic Recovery
Stimulus packages are one reason why the economy should get back on its feet quickly. Much of the stimulus money is to help protect jobs, provide financial aid to families, and strengthen the healthcare sector.
Here’s a quick overview of the financial aid that individuals have already received:
Families First Coronavirus Act
This Covid-19 stimulus package provided the following help:
- Paid leave if you have to take time off work if you are sick or take care of someone due to the coronavirus
- Expanded the unemployment benefit system
- Provided free Covid-19 testing for everyone
The CARES Act
Two trillion dollars was allocated to provide even more help to businesses and taxpayers who were walloped by the coronavirus crisis. Some of the measures in the CARES Act include the following:
- An extra $600 to people receiving unemployment insurance
- $1,200 stimulus check for most taxpaying Americans
- A moratorium on evictions for many tenants who can’t pay rent
- A freeze on repaying student loans through September 2020
- Assistance for small businesses
If you still haven’t received your stimulus check, read this article to learn more about tracking your Covid-19 rebate.
Signs of Economic Recovery to Look Out For
The glimmer of hope of an economic recovery gives many people reason for optimism. However, it’s still early days. A second wave of Covid-19 outbreaks could see more lockdown orders put in place. Even the effects of social distancing can have a massive impact on how and if businesses can operate.
What are the signs in the next few weeks that indicate the economy is recovering? Here are a few to look out for:
- Employment — The jobless rate is one of the most reliable signs of economic recovery. When employment figures continue to rise month-on-month, it’s a sure sign the economy’s health is improving.
- Spending — When the job rate picks up, we’ll all have more money to spend. When people feel safe spending money, it’ll boost the economy even more.
- Consumer and business optimism — A sure sign the economy is on its way to recovery is general optimism. This encourages folks to save less and spend more, and many small businesses will start expanding.
- Vaccine for Covid-19 — Many people say that life will only get back to normal when scientists find a cure or vaccine for Covid-19. However, a vaccine could still take at least 12 months before it’s available to the public.
The Economic Recovery After Covid-19: A Takeaway
The drop in unemployment could be the first sign of economic recovery. During the bleak times of Covid-19, any kind of hope is needed. However, time will tell if employment rates pick up, and the economy returns to full health soon.