The reflux of American unemployment in trompe-l’oeil

Published on : 15/09/2020 – 10:52

In the United States, unemployment fell well below the 10% mark in August. A figure encouraging at first glance, but contradicted by other indicators. The return to full employment will be a long-term project.

Unemployment was over 10% in July, and it suddenly fell to 8.4% the following month. It was the good surprise of the return to the United States. Already more than half of the jobs destroyed by the confinement have been offset by new hires. This is another sign of the dynamism of the American market. At the same time, the fear of losing one’s job is on the rise: 18% of Americans fear unemployment in the coming year, a figure that has been rising steadily since June. In addition, the pace of private job creation is slowing down. The economists of the Federal Reserve therefore take official statistics with a grain of salt. The real level of unemployment would rather be 11%, argues the independent economist Michael Farren of the Mercatus Center, George Mason University. The figure provided by the employment department is based on a survey of American households. Michael Farren looks at the size of the job market: before the pandemic, 164.5 million workers were counted, in employment or looking for work. Today, they are only 160.8 million.

What happened to the 3.7 million who are missing?

They are no longer considered to be unemployed, because they have effectively given up looking for work. This primarily concerns seniors, they have accelerated their retirement. Some gave up their jobs to avoid contracting the coronavirus, others preferred to throw in the towel after being made redundant. The over 65s represented 7% of the workforce in April, and 17% of those leaving in August.

This phenomenon also affects women, more likely than men to have disappeared from the labor market. Already because they worked more often in services very affected by confinement such as hotels or restaurants. And then because they had to leave their jobs to take care of their relatives affected by the pandemic or to take care of children deprived of school during the confinement. In fact, these two groups who had returned to employment before the Covid-19 crisis, when the market was super tense, were the first to be sacrificed by the crisis.

Their sidelining will have negative consequences for the recovery

Their incomes drop, they consume less, economic activity will therefore suffer. The financial situation of job seekers is also deteriorating. The duration of their unemployment period is lengthening, and their future exceptional allowances are no longer guaranteed. The public aid programs put in place during the pandemic are expiring, due to a lack of agreement between the Republicans and the Democrats to renew them. Ditto for loans granted to businesses so that they retain their workforce. There could therefore still be waves of massive layoffs, especially in the air or energy sector. It took more than six years for the United States to recover the 8 million jobs lost by the 2008 financial crisis. By this yardstick, the return to full employment is still a long way off since the coronavirus has caused a much more sudden recession. , eliminating 22 million jobs in a few months.

► In short

In China, retail sales are on the rise, a first since the start of the epidemic.

+ 0.5% in August, while these sales fell 20% in January and February. Another indicator confirms the recovery of the Chinese economy: growth in industrial activity is accelerating, + 5.6% year-on-year for August.

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