The U.S. economy is starting to slowly recover from the recession caused by Covid-19 that caused many Americans to lose their jobs or their businesses. Over eight million jobs were lost during the pandemic.
With successful vaccination programs and declining Covid-19 cases, businesses are starting to re-open and a huge infusion of federal aid is helping to stimulate recovery. However, the economy is sending some confusing signals. For instance, there’s the paradox of labor shortages in many industries while employment rates are high.
Slow job recovery
One concern is the state of job recovery. Many college-educated and white-collar employees were able to work from home during the pandemic and some even managed to build up savings and expand their wealth due to rising home values and a sky-rocketing stock market. However, job cuts severely affected those without college educations and low-wage workers. Many women also had to leave the workforce to care for their children.
There are still many Americans who are unemployed, although numbers are declining. Difficulties in finding jobs have encouraged some people to try earning a living online. One way to do this is to build online courses.
Eduard Kline, a certified Digital Growth Marketer, gives advice to entrepreneurs on how to build, host and earn money from online courses. Find out more about how to select an online course site from the many user-friendly platforms available.
Inflation
The slowing down of the pandemic has created supply bottlenecks and price increases. Consumer confidence had a record gain in March but fell in April, partly due to the 4.2% increase in the Consumer Price Index (CPI).
Americans have less net disposable income as prices of items like homes, food, automobiles and appliances go up. When consumers begin to buy because they fear prices will keep getting higher, this causes sustained levels of inflation. Most honest economists admit that they don’t really know what is going to happen to inflation over the long term. Some believe inflation needs to go up a bit because it has been too low for too long.
Concerns about “Bidenomics”
President Joe Biden managed to push a $1.9 trillion package through Congress in March. Most adults received a $1,400 stimulus payment. He is also proposing a $2.3 trillion infrastructure package and a $1.8 trillion investment in families, children, and education.
Biden’s actions have resulted in attacks from both the right and the left. Republicans are worried that the high spending model could lead to rapid growth and potential overheating of the economy. A real income increase won’t happen if policies don’t help to push up wages more than prices.
With the economy running hot, however, it may be possible to pull in those who were marginalized before and low-paid workers, thus driving down unemployment. Firms could even explore labor pools they may not have previously considered.
Rolling with the bumps
When many jobs have been lost, businesses have closed and people have been fired or cut down their working hours, the economy takes time to recover. There is always some “reallocation friction” after a recession, especially when there’s been a large drop in employment. It’s unlikely for recovery to take place in a linear manner without a few bumps in the road that need to be navigated carefully.
The economic engine is humming along at present but there are still a number of elements that point to a troubled market, such as the fact that unemployment remains high, banks are still being tight about lending and the housing market is a tough one for too many Americans.