Most economists abandoned hope for a “V-shaped” recovery long ago
As the continued spread of COVID-19, slowed reopening, and returns to shutdowns exact a high price from the economy, a recent New York Times article and flatlining unemployment claims paint a dark picture for America’s recovery. From the Times article:
“Most economists abandoned hope for a ‘V-shaped’ recovery long ago. Now they are warning of an outright reversal, with mounting job losses and business failures. And this time, much of the damage is likely to be permanent.”
The report also notes “small businesses around the country say that if lockdowns persist without some type of additional financial cushion from Congress, they will be faced with a dire choice.”
Indeed, as the initial burst of funding provided to businesses to retain and rehire employees runs out, businesses are “beginning to lay off employees” once again due to depressed business activity.
Today’s unemployment claims numbers seem to bear this out. With 1.3 million unemployment insurance claims today, and initial pandemic unemployment insurance at just below 1 million, the total weekly initial claims have flatlined over the last seven weeks and remain at 11.8 times pre-coronavirus levels. In other words, the “recovery” some saw in May and June was a mirage.
As states return to lockdown in response to spikes in COVID-19 cases, businesses will experience the continued deterioration of revenues, leading to hiring freezes, layoffs, and permanent closures.
Some may balk at the cost of saving the economy, but the cost of inaction will be greater:
- Americans have filed more than51 million unemployment claims since COVID-19 began.
- Over 100,000 small businesses have already closed their doors forever.
- Over 2 million small businesses with fewer than 500 employees could be at immediate risk of closing.
- The International Monetary Fund forecasts an 8 percent drop in the U.S. GDP this year – compared to a 2.5 percent drop during the Great Recession.
Read the full article here. If you would like to learn more about the Coalition and why we advocate for the creation of America’s Recovery Fund to sustain our nation’s economic recovery, please don’t hesitate to email [email protected].