Coronavirus has impacted the economy in an unprecedented way. Lasting longer than we could have imagined, its impact has been felt worldwide and across all sectors. Now the unemployment figures are mirroring those of the 1930s Great Depression.
The unemployment rate in the US has risen exponentially. A few months ago, unemployment was the lowest it had been in 50 years, at only 3.5%. Fast forward to May and the unemployment rate is to 14.7%. Around 20.5 million people lost their jobs in April as a consequence of the coronavirus pandemic. This unemployment rate is worse than any time since the Great Depression. Already back in March, there were 870,000 job losses and unemployment was 4.4%. These figures showed the early stages of businesses shutting down and staff being let go. They were a mere forewarning of the figures to come.
Although every sector of the economy is suffering, the leisure and hospitality sector has been hit the hardest. The payrolls in this sector have fallen by 47% as hotels, restaurants and bars have been forced to close. The retail industry has lost 2.1 million and many retailers have claimed bankruptcy. Employers in the education and health sectors have cut 2.5 million positions.
Unemployment Implications for the Government
The economy is now having to support the millions of workers seeking unemployment benefits. Just last week, a further 3.2 million workers in the US applied for these benefits. Over the last six weeks more than 33 million people have filed for unemployment benefits, in the US alone. This is representative of around 20% of the US workforce.
Not Just Unemployment
Aside from the disheartening unemployment rates, other aspects of the economy are suffering. The US is showing the worst growth numbers in the last 10 years. Regarding retail sales, they are the worst on record.
Can the Economy Recuperate?
18.1 million of these losses are allegedly “temporary”. The companies are confident that the economy will bounce back. However, at this stage it is impossible to predict the “new reality” that we will enter post-coronavirus. This means that many industries and business models will be forced to undergo crucial changes.
For the hospitality industry, this could mean reduced capacity and consequently fewer attending staff. For retail, this could mean a shift from physical shops to online and thus no shop assistants. This signifies that though many businesses predict full recovery, they are assuming that their business and its workforce will be operating as normal. Saying that, some furloughed workers are starting to return to work as lockdowns are becoming less strict.