Although the world’s largest economy has recovered faster than previously forecast, there are jobs that will not regenerate soon and sectors such as tourism that have revived at a slower pace.
The U.S. economy is recovering faster than expected from the recession caused by the pandemic, surpassing the most pessimistic estimates. But some areas remain in decline and doubts abound about what the recovery will be like.
How fast will the economy grow?
The International Monetary Fund estimates that U.S. GDP will increase 5.1% this year after contracting 3.5% in 2020, when the pandemic forced cessation of activities. But economists believe the growth rate could rise further.
The nearly $ 3 trillion in government stimulus programs last year, including a $ 900 billion measure in December, was key to helping the economy recover. And Congress is moving toward approving President Joe Biden’s $ 1.9 trillion bailout package, which will provide more support to businesses and families, and state and local jobs.
Federal Reserve Chairman Jerome Powell said growth could reach 6%, while analysts such as Gregory Daco of Oxford Economics estimated it could top 7%.
The rapid recovery has raised concerns about possible price hikes, but Powell downplayed those fears, saying inflation peaks are unlikely to last in the coming months. The Fed pledged to keep interest rates low until employment recovers and inflation exceeds 2% for some time.
When will employment return?
As companies were able to reopen and adapt to new restrictions by covid-19, 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 most affected service sectors, such as hotels and restaurants, and these job losses especially affected black and Hispanic workers.
Millions more have seen their working hours cut or have left the workforce altogether, including a large number of women engaged in childcare tasks.
It is likely that these jobs and hours will not recover until the vaccine reaches a critical mass of Americans.
The official unemployment rate reached 6.3% in January, up from 3.5% the previous year. For black workers, however, it was 9.2%. But by including those discouraged from looking for work, or with part-time jobs aspiring to more hours, the broader rate was 11.1%.
“Help and encouragement are key to saving covid-contaminated water, stopping job losses … and preparing the pump for a stronger recovery once social distancing measures are lifted,” he said. said economist Diane Swonk of Grant Thornton.
For Moody’s Analytics, Biden’s stimulus plan would create 7.5 million jobs this year.
Which sectors are rising faster?
The housing market, strong before the pandemic, stopped only briefly before rebounding to higher levels.
Sales of new and existing homes have risen by around 20% above the pre-pandemic level, driven by very low mortgage rates and the possibility of more and more people moving to less congested areas thanks to remote work .
But supply fell as home builders struggled to keep up with demand, which has pushed up prices.
The manufacturing sector has also recovered since last summer, although production remains below early 2020.
And although the pandemic forced consumers to cut back on their activities, they spent on cars, electronics, furniture and construction and gardening supplies. Online retailers have been the big winners, with sales increasing by around 30% during the year.
Where does the damage persist?
The most visible impact of the recession is on the travel industry, the hotel industry and entertainment, which will likely be activated quickly when people can travel freely and enjoy concerts, movies or plays.
But economists have warned of lasting damage. Thousands of shops and restaurants have closed permanently, and there is a risk of a wave of bankruptcies if the recovery does not come soon enough for some heavily indebted companies.
State and local governments, which are typically unable to obtain loans to finance their operations, are faced with the possibility of removing teacher, police and firefighter positions from the payroll to offset the massive expenditure of aid.
And landlords and tenants are currently protected by moratoriums on foreclosures and evictions, but their fate will depend on what happens to their overdue rent and mortgage payments once those moratoriums expire.
“We must continue to provide financial support to our citizens, building a bridge to the end of the pandemic,” Treasury Secretary Janet Yellen said this week.