More than a year after the pandemic began, the US economy is in full recovery. But reaching that milestone is not yet easy.
CNN Business’s Back-to-Normal Index, developed in partnership with Moody’s Analytics last year, shows that the US economy has returned 90% to what it was before the pandemic began more than a year ago.
Composed of 37 national indicators and 7 state-level indicators, the index bottomed out at around 57% in April 2020.
However, despite significant improvements, it will be difficult to regain the last 10%. Immunization efforts are ongoing and consumers are spending money on food and travel again, yet the country continues to do millions of jobs below pre-pandemic levels. Meanwhile, many workers continue to hesitate to return to face-to-face work, and in many areas where schools and day care are not yet fully functioning, the mystery of childcare remains unsolved.
Here’s what it takes to bring a country 100% back to its pre-pandemic economy:
Labor market gapThe labor market is in a difficult stage of recovery. Compared to before the pandemic, the country has millions less jobs, and at the same time, many companies say they can’t find the workers they need. Economists warn that most jobs will come back, but some may disappear forever.
The most devastated states, such as New York, Nevada and Hawaii, still have a national unemployment rate of less than 6.1%.
Economists predict that many jobs will come back for the rest of the year. With the full resumption of face-to-face school education in September, another job could be added.
However, as of April 2021, the United States still lacked 8.2 million jobs compared to February 2020, before the pandemic. The hospitality and leisure sector alone, although most affected by last year’s blockade, had the strongest employment recovery, but still 2.8 million employment declines.
According to LinkedIn data measured by the Back-to-Normal index, job listings for healthcare, retail and real estate are breaking through the roof. Low mortgage rates are fueling a national housing boom.
Meanwhile, manufacturing executives complain that they can’t find skilled workers.
Cross-sectoral companies are raising wages to attract employees, and Republicans argue that increased unemployment benefits during the pandemic era are the reason workers are rather at home.
Bank of America estimates that staying at home makes financial sense for those at the bottom of their income range, which means they earn less than $ 32,000 a year, given the enhanced profits. There may be. For all other workers, it is to weigh the risks of returning to work that may expose them and their loved ones to a virus that is still very active in the national community.
It’s up to the consumerThe US economy is driven by people. Private consumption fuels more than two-thirds of GDP, which is the broadest measure of economic activity.
Consumers are spending a lot of money again, especially on restaurants and travel. There, at some point last year, the business stopped.
Now, the biggest piece of recovery puzzle is to keep people spending. Washington’s stimulus and expanded unemployment aid helped. However, US Department of Commerce Economic Analysis data used in the Back-to-Normal index show that national savings rates are much higher than before the pandemic.
There are two concerns here. People need to spend rather than save to bring the economy back to normal, but at the same time, recovery in spending, along with other factors, including rising raw material prices, is driving inflation to skyrocket.
Some economists are worried that prices will rise sharply, discouraging consumer spending. That’s very bad news for recovery, but so far there are no such signs.
From an investor’s point of view, stocks remain close to record highs. But if the Federal Reserve decides that inflation is too much of a concern, the central bank could change its zero interest rate policy and put an end to the stock market boom.
Overall, the recovery is on track. But it’s based on a large number of moving parts — and a delicate balance that can’t be upset before things get back to normal.
The US economy is closer than ever to “returning to normal.”But there’s still a long way to go | Business
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