Pandemic-battered US economy unlikely to see better days even in 2021, warn experts
If the coronavirus pandemic has devastated the US’ health sector, its economy is doing no better either. While the country is racing towards capturing the first spot in terms of the death toll, its oil-functioning economy has been left battered with 17 million people having lost jobs in a matter of three weeks—something that was unthinkable even two months ago (unemployment rate in February was 3.6 percent). Small businesses saw layoffs going up by an incredible 1000 percent in March and it could be worse in April.
The question which is doing the round the most is when the situation will see a turnaround. According to top business economists, the economy is very unlikely to see better days even through 2021. In fact, according to the average estimate of 45 people who were surveyed by the National Association for Business Economics (NABE), as many as 4.5 million net jobs in the country could be destroyed in this quarter itself.
The experts have also made a gloomy forecast that less than two million of the lost jobs will be recovered by the end of next year, which will see the unemployment rate going above six percent for the next 21 months.
“Panelists believe that the U.S. economy is already in recession and will remain in a contractionary state for the first half of 2020, as the COVID-19 pandemic severely restricts economic activity,” NABE President Constance Hunter, chief economist for KPMG, said.
“Conditions will improve by the end of the year with support from aggressive fiscal and monetary stimulus,” she said. However, the improvement is expected only after the economy goes through a devastation in the second quarter of 2020 with the median forecast looking at an annualized rate of below 27 percent for the April-June period.
However, the NABE survey also pointed to the fact that economists are quite uncertain over the consequences the economy sees when its major parts shut down while tackling the spread of the coronavirus. While there are estimates that the second-quarter GDP would go down by 50 percent, others predicted only one percent fall in the second-quarter GDP and a sharp 20 percent rebound from there on with millions of jobs recreated and unemployment going down rapidly.
Airliners, plane makers cut costs
The aviation sector has been one of the worst hit with air traveling plummeting in the wake of the outbreak. Ninety-five percent of the travel has dropped, forcing the carriers as well as plane manufacturer Boeing thinking of ways to cut payroll costs.
On Thursday, April 9, Delta Air Lines CEO Ed Bastian said nearly 35,000 workers have volunteered till now for unpaid leaves of absence the company has offered to cut costs, Reuters reported. Bastian said the company was enhancing employee benefits while on leave and offering new longer-term leaves of up to a year to draw more volunteers.
Boeing is also considering a plan to cut down its workforce by about 10 percent, sources familiar with the development told the Wall Street Journal. The plan could see layoffs, buyouts and early retirements. The manufacturing giant has also been suspending production at various plants, including that of 787 aircraft at facilities in South Carolina.