When the coronavirus pandemic began and plunged the US economy into a recession, there was a generally accepted optimism that that the recession would be short lived and follow a ‘V’-shaped pattern. However, as the pandemic continues, it is becoming clear that the economic downturn is going to last much longer than previously thought.
A researcher at data provider Sentieo commented on the situation. He said “the ‘V-shaped’ recovery is a mirage. We are seeing a permanent reduction in the size of several sectors in the economy.”
Moreover, some economists were touting the addition of jobs to the market as a sign that the economy was already in the swing of experiencing a recovery. However, this is not quite the case. Julia Pollak, an economist for ziprecruiter, noted that as of August 17th, online job openings plunged nearly 9%. She continued to say that “it looks like employment may be flat, or even declining… it’s a very bad sign for hiring in September.”
To make matters even worse, “many of the recent large company announcements regarding furloughs and job cuts have yet to hit, indicating that the economy will continue to face challenges in the months to come.” Moreover, nearly half of the companies that have already announced layoffs and furloughs intend to make more within the next twelve months. These are signs that the economy is still in a difficult situation, and points to the idea that this recession will adopt a ‘U-shaped’ pattern.
Economic analysis of the current situation thus leads to the conclusion that the recession will last much longer than it was initially anticipated to. The people hit the most by this recession are wage workers who do not have the option to work remotely and have had their hours significantly reduced due to their jobs being deemed unessential.
These individuals can apply for unemployment, but the excess money that was being given out was stopped at the end of July. Thus, people are left in an especially vulnerable situation. Some have looked to returning to school and pivoting in their careers to find new employment.
The bottom line is clear: coronavirus is taking an economic toll on nearly every American. The recession will likely be much longer than initially anticipated, and we will see a level of struggle comparable to the 2008 recession. Americans will need to be strong during these times and have compassion to help those in need.