In what appears to be good news for the recovery of the United States’ economy, unemployment claims have reached a low point after climbing to 6.6 million in April 2020 during the first wave of the Covid-19 Pandemic. However, the amount of people actively claiming unemployment is still higher than the number of people who claimed it during the Great Recession in 2008.
Just under a year ago, Covid-19 brought the American economy to a standstill. With millions out of work, it quickly became the country’s worst financial crisis since the Great Recession. During the Great Recession, only around 655,000 people claimed unemployment per week — far less than at any point so far during the pandemic.
In April, unemployment claims reached 6.6 million per week, before dropping to approximately one million per week in September, and 684,000 last week. Additionally, 242,000 people claimed federal pandemic unemployment insurance benefits last week because they were unable to claim their standard unemployment benefits. The unemployment numbers have remained consistently high in certain industries and need to decline more rapidly if the United States seeks to make a full recovery by next year.
The majority of the lost jobs causing people to claim unemployment are in the consumer services industry, which is still struggling to gain back lost ground following the pandemic. Last April, thousands of businesses in consumer service were forced to close their doors to stop the spread of Covid-19, but many of the people who lost their jobs, as a result, are still struggling to find new work.
The challenges of finding new work are only exacerbated by the fact that some companies are unable to withstand the financial challenges of the pandemic. Businesses around the country are making frequent cuts to their staff or closing altogether because they are unable to cope with continuously low profits as pandemic regulations have gone on for nearly an entire year.
In comparison to last week’s unemployment data is information showing an average of only 230,000 unemployment claims per week from 2017 to 2019 — well within the 4 percent unemployment range of a healthy economy. This data highlights how severe a financial crisis the United States and the new Joe Biden administration are facing.
Although the economy still has a long way to go to make a complete recovery, top government officials are optimistic that the recent stimulus bill from President Biden will kickstart the economy as businesses reopen. IN addition to giving millions of Americans some additional money, Biden’s stimulus also provides special funding for small businesses to help them stay afloat.
Despite the optimism, Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell are aware that certain sectors of the economy will struggle to recover as quickly as others. In particular, airlines, hospitality, and other parts of the travel and tourism sector have the most work to do if they hope to make a complete recovery. Hopefully, as vaccine rollouts increase across the country, cases of Covid-19 will continue to decline and alleviate the financial challenges wrought by the pandemic.