Unemployment Cliff
The pandemic has laid off many workers and most are still not back to previous levels. This trend comes amid the pandemic still wearing off its effects and the US’s unemployment rate still being quite high relative to past levels. A few months ago, Michael Pearce, senior U.S. economist at Capital Economics explained it well finding that “The rate at which people are quitting is ridiculously high, given how high unemployment still is,” and that “People are so confident in their prospects of finding a new job that they’re quitting at unprecedented rates.” Because of this confidence some are seeing this as a positive sign in the economy as more people seem to feel confident and optimistic.
Not only is it good for the Economy according to some, but it is good for the pockets of workers around America. That’s because companies that announced increases in wages such as Bank of America and Walmart have seen a following surge in applicant interest. However, the harm may be coming to the surface shortly because in a month’s time – millions of jobless Americans may lose their Covid-era income support. This is because it appears there is no urgency among federal lawmakers to extend pandemic benefits past Labor Day (the current official cutoff date).
Next month many people may be affected, in fact, as of July 10 more than 9 million people were receiving financial assistance. It is projected that around 7.5 million people will still be collecting benefits next month. What do you think about the Fed’s decision here? And should they extend the timeframe of economic support?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
