Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Lockdowns May Have Permanently Scarred the Labor Market

  by    0   0

Every week, analysts and pundits pour over the latest weekly jobs report looking for signs of life. Every month, we dive into the monthly unemployment numbers hoping they signal economic recovery. But these unemployment numbers don’t tell the whole story.

The government economic shutdowns in response to the coronavirus pandemic have deeply wounded the economy in ways that won’t immediately show up in the numbers. In fact, they could leave scars on the economy that don’t fade for years.

Many people still believe the US economy will quickly recover once scientists develop an effective coronavirus vaccine or the pandemic simply runs its course. But there are plenty of data points that undercut that narrative.  Businesses are shutting down and bankruptcies are at a 10-year highAmericans owe billions in back rent. There is a rising number of over-leveraged zombie companies. And a tsunami of defaults and bankruptcies are on the horizon.

The quickest cure for our economic woes is getting people back to work. According to the mainstream narrative, governments will lift restrictions, people will head back to work and the economy will bounce back.

A recent Reuters report casts doubt on this assumption. While some people will certainly return to work as governments ease up on restrictions, the lockdowns may have significantly altered the labor market. As the report put it, “Six months into the pandemic, evidence of longer-term damage to the US labor market is emerging.”

In a nutshell, a lot of people will likely never return to work.

According to analysis by Reuters and labor economists, retirements are drifting upward, women are not re-engaging the job market quickly and many temporary furloughs are becoming permanent layoffs.

Economic growth depends on how many people work. If more retire, or are kept from the job market because of childcare or health and safety issues, growth is slower.”

People 65 and older account for 17% of workers who have left the labor force since August. Women make up 54% of the departed and 47% of the total workforce. Analysts say these people may never return to their jobs. Retirements are rising and many women are opting to stay home. The number of parents homeschooling is skyrocketing, meaning more people opting out of the workforce.

Meanwhile, a lot of temporary furloughs are becoming permanent job cuts.

The road back to employment may be getting harder, as suggested in the analysis of CPS data by Rand’s Edwards. Of 7.6 million people ‘temporarily’ laid off as of June, the number who had found jobs by July – 2.4 million – was eclipsed by the 2.8 million who either left the labor force altogether or said they were no longer expecting to get their jobs back. That’s the first time in the pandemic that was the case.”

As the pandemic unfolded, many companies temporarily furloughed workers. Now, as the economic realities begin to sink in, companies are letting a lot of those workers go for good. Several executives interviewed by CNBC said they were moving forward with permanent layoffs. The head of a large transportation company said about half of its furloughs were now permanent headcount reductions. Spirit AeroSystems’ CEO told CNBC the company is now making the layoffs of thousands permanent after the Boeing/Airbus cuts.

It will take many areas of the economy years to recover. Travel and entertainment have been decimated. And as the massive levels of debt begin to catch up with overleveraged companies, you’ll likely see more businesses close their doors forever.

In a nutshell, it could take years for the economy to recover. And that doesn’t even take into account the fact that the economy was already damaged in the first place.

Gold IRA Rollover to 401k

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

China Greenlights Massive Increase in Gold Imports

China has opened the door to billions of dollars in gold imports. Reuters cites five sources indicating that Beijing has greenlighted the import of 150 tons of gold valued at around $8.5 billion at current prices. The report notes that China’sudden appetite for gold could potentially “support global prices.”

READ MORE →

US Government Debt Problem Even Worse Than Advertised

Through the first six months of fiscal 2021, the US government ran a record $1.7 trillion budget deficit. And there is no end in sight to the borrowing and spending. Just last month, the national debt eclipsed $28 trillion for the first time. But it’s even worse than that. A lot worse.

READ MORE →

US Stimmy Checks Support Foreign Manufacturing Economies

What do you get when you hand Americans big fat stimulus checks after decades of offshoring the country’s manufacturing economy? Massive trade deficits.

READ MORE →

Budget Deficit Surges to Record $1.7 Trillion in Just Six Months

The US government ran a budget deficit of $659.59 billion in March, pushing the budget shortfall to a record $1.7 trillion through the first half of fiscal 2021, according to the Treasury Department’s Monthy Treasury Statement. The March budget deficit ranks as the third biggest monthly shortfall in US history, driving Uncle Sam the biggest […]

READ MORE →

The Powerful Case for Silver: Free Updated and Revised Report

Silver enjoyed a brief moment in the limelight earlier this year when the so-called “Reddit Raiders” turned their attention to the white metal. The spotlight has dimmed somewhat, but there are still plenty of reasons to be bullish on silver. Our fully revised and updated The Powerful Case for Silver report provides an in-depth overview […]

READ MORE →

Comments are closed.

Call Now