As coronavirus cases continue spiking upward this cold and flu season and states begin their lockdowns again, the economic recovery that began this spring – with more than 16 million jobs recovered since labor markets bottomed in April – stalled in November as 560,000 Americans left the labor force altogether.
These are Americans who had been unemployed but because they cannot find a job have simply given up. Currently, the number Americans not in the labor force since February has grown by 5.5 million to 100.6 million.
That is in addition to the additional 4.9 million unemployed since February and looking for jobs. How soon before they leave the labor force too?
Now, businesses like restaurants are simply closing up shop because there aren’t enough customers because of Covid fear, but much of it is also those that are compelled to close business because state and local government restrictions do not permit them to remain open. California, which makes up 12 percent of the U.S. population, has issued state-at-home orders for about three-quarters of the entire state, where 29,000 new cases daily and rising are being reported, out of 41,800 probable new cases daily.
While the nation waits out the vaccine approval and distribution – the FDA is said to be on the verge of approval by the end of the week – until herd immunity is achieved, state and local governments will opt for lockdowns and closing schools, and many parents will be compelled to work from home or to get furloughed.
We saw what happened during the last lockdowns, where 25 million people lost their jobs, and the economy contracted by 31 percent annualized in the second quarter.
We’ll know very shortly if the same thing is going to happen again. The thing to keep your eyes on will be the weekly jobless claims, to see if they start spiking again.
On that count, Congress is considering a scaled-down $908 billion spending bill that includes $288 billion for reauthorizing the small business Paycheck Protection Program, $45 billion for critical industries, $180 billion extending unemployment for Americans, $82 billion for schools to safely reopen and $160 billion to state and local governments.
But as the cases and deaths rise and the lockdowns ramp up, watch for the bill to rise, too, depending on how bad the economic devastation is. Stay tuned.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.