Although the world’s largest economy has recovered faster than forecast, there are jobs that will not regenerate soon and sectors such as tourism that have been reactivated at a slower pace.
The US economy is recovering faster than expected from the recession caused by the pandemic, beating the most pessimistic estimates. But some areas remain in decline and doubts abound about what the recovery will look like.
How fast will the economy grow?
The International Monetary Fund estimates that the United States’ GDP will rise 5.1% this year after contracting 3.5% in 2020, when the pandemic forced stoppages. But economists believe that the growth rate could go even higher.
The nearly $ 3 trillion in government stimulus programs last year, including a $ 900 billion measure in December, were key to helping the economy recover. And Congress is moving toward passing President Joe Biden’s $ 1.9 trillion rescue package, which will provide more support for businesses and families, and state and local jobs.
The president of the Federal Reserve (Fed), Jerome Powell, said that growth could reach 6%, while analysts such as Gregory Daco of Oxford Economics, estimated that it could exceed 7%.
The rapid recovery has raised concerns about possible price hikes, but Powell played down those fears, saying inflation spikes are unlikely to last in the coming months. The Fed has vowed to keep interest rates low until employment recovers and inflation surpasses 2% for some time.
When will the job return?
As companies were able to reopen and adapt to new covid-19 restrictions, the country recovered roughly half of the 20 million jobs lost in the first weeks of the pandemic.
Many of the remaining 10 million jobs are in the worst-hit service sectors, such as hotels and restaurants, and those job losses hit black and Hispanic workers especially hard.
Millions more have had their work hours cut or left the workforce entirely, including large numbers of women who take care of childcare.
Those jobs and hours likely won’t pick up until the vaccine reaches a critical mass of Americans.
The official unemployment rate reached 6.3% in January, from 3.5% the previous year. For black workers, however, it was 9.2%. But when including those discouraged from looking for work, or with part-time jobs aiming for more hours, the broadest rate was 11.1%.
“Aid and encouragement are critical to saving Covid-polluted waters, halting job losses … and priming the pump for a stronger recovery once social distancing measures are lifted,” said economist Diane Grant Thornton’s Swonk.
For Moody’s Analytics, Biden’s stimulus plan would create 7.5 million jobs this year.
Which sectors rebound the fastest?
The housing market, strong before the pandemic, paused only briefly before rebounding to higher levels.
New and existing home sales have risen about 20% above the pre-pandemic level, driven by rock-bottom mortgage rates and the potential for more and more people to move to less congested areas thanks to remote work.
But supply fell as homebuilders struggle to keep up with demand, driving prices up.
The manufacturing sector also rebounded since last summer, although production remains below early 2020.
And while the pandemic forced consumers to cut back, they spent on cars, electronics, furniture, and construction and garden supplies. Online retailers have been the big winners, with sales increasing around 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 kick in quickly when people can travel freely and enjoy concerts, movies, or plays.
But economists have warned of lasting damage. Thousands of stores 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, typically unable to obtain loans to fund their operations, face the possibility of cutting teacher, police and fire jobs from their payroll to offset massive aid spending.
And homeowners and tenants are currently protected by moratoriums on foreclosures and evictions, but where they go will depend on what happens to their overdue rent and mortgage payments after those moratoriums expire.
“We must continue to provide financial support to our citizens, creating a bridge to the end of the pandemic,” Treasury Secretary Janet Yellen said this week.