Dhe recovery in the American economy has slowed significantly. This is indicated by the latest labor market data. The bottom line is that companies and other employers filled 1.8 million jobs in July. That sank the Unemployment rate from 11.1 percent to 10.2 percent. Before the corona crisis hit the United States, the unemployment rate was 3.5 percent, at a 50-year low. In June employment had increased by almost 5 million.
After a dramatic economic downturn in March and April, the labor market recovered strongly in May and June as many companies called back their workers after lifting business restrictions. This process has slowed in recent weeks after the pandemic spread in many regions of the United States slowed down again. The American economy has made up almost half of the unemployment caused by the pandemic crisis.
The waning success in combating unemployment is becoming politically explosive because the unemployment aid decided in the government’s rescue package has expired. Unemployed Americans had received $ 600 a week in addition to their state’s unemployment benefits by the end of July. The White House and the parties in Congress have not yet been able to agree to continue the program. Republicans consider unemployment benefits to be too high and also want to put a trillion dollars less in a new bailout package than the Democrats. They insist that the federal government continue to provide unemployment benefits and support a $ 3 trillion rescue package. The leader of the Republicans Mitch McConnell has announced that it will agree to a compromise between the White House and Democrats, which is apparently currently being worked on.
Time is short: Without federal aid, the unemployed depend on an average of around $ 330 a week. Aid varies according to the state and is granted for different lengths of time. For many families, the situation becomes precarious because, above all, they can no longer pay their rents. Different tenant protection rules have been issued in the country in view of the pandemic, which have kept families from giving up their homes. Many of these rules are now expiring.
A group of researchers from renowned universities such as Princeton and MIT has now released a study that 30 to 40 million tenants could lose their roofs over the next few months due to evictions caused by a lack of rent payments. In ordinary years there are 3.7 million evictions per year. America lists around 100 million people in rental properties. Failure to pay also threatens property owners who may have trouble servicing their real estate loans, the researchers warn.
The fragility of the situation can be seen in the latest applications for unemployment benefits: in the last week of July there were 1.2 million. This is the lowest since the beginning of March, but in a historical long-term comparison it is higher than in most recessions that the country had previously suffered. A total of 16 million Americans receive state unemployment benefits.
The labor market clearly shows that the virus determines the course of the economy. The numbers are worst, where the number of people who tested positive grew particularly quickly. Local labor markets in the United States, with infection numbers like Texas and Arizona growing in July, recovered more slowly than those in states like New York, which, after dramatic numbers in the first wave, were more successful in containing the pandemic. The decline in business activity in parts of the country is not primarily due to new restrictions imposed by regional governments. This is suggested by a study by the economist Austan Goolsbee. This leads to the conclusion that most consumers are simply afraid to go shopping. The slow recovery has resulted in many workers becoming unemployed for a second time after being called back to work.