In the Short Term, Lower Unemployment is a Relief
President Trump made a big deal about the June employment data that showed a good jump in people going back to work following weeks of coronavirus-induced furloughs. US unemployment dropped to 11.1% in June, falling from an all-time high of 14.7% in April. The number of unemployed persons fell by 3.2 million to 17.8 million, while employment rose by 4.9 million to 142.2 million. These numbers are good news but they are far from what is needed to reach a normal economy.
What is needed is more stimulus. But the latest package remains stuck in Congress, partly due to the fact that the men on the Hill are on their two-week 4th of July recess. When Congress returns the men on the Hill will take up the stalled stimulus package. It remains to be seen if it has the required support. With Senator Mitch McConnel having some trouble in his reelection efforts, he might now be willing to help get the stimulus package passed, especially if he wants to help President Trump stay in the White House.
Meanwhile, in the last week of June initial unemployment claims rose by over one million. That implies that the outlook for job losses remains grim. Companies remain at far less than full capacity and the coronavirus pandemic is far from over. It will take quite some time before we can all sit back and relax. Most economic forecasters are predicting that a real recovery will take years to come into full bloom.
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