By July, many states were using trial-and-error methods for reopening their economies, all the while continuing to try to get the virus under control.
More than 22 million jobs were lost in March and April as the outbreak brought normal business to a screeching halt. As economies slowly began reopening in late May, June, and July, , the economy generated a little more than 9 million jobs. But that still left a huge shortfall in jobs.
And of course, on Thursday, the Labor Department reported another million Americans applied for unemployment benefits. More than 14.5 million are collecting traditional jobless benefits. That is quite a bit more than the 1.7 million on the unemployment lists one year ago.
Yahoo Finance notes that Trump is touting an economic recovery, but if big companies with access to all necessary financing can’t keep payrolls intact, we may be in bigger trouble than anyone realizes.
At this week’s Republican National Convention, the coronavirus pandemic was barely mentioned, and certainly, nothing was said about what the administration’s plans were for economic recovery from the pandemic. White House economist Larry Kudlow ticked off five economic booms he attributed to President Donald Trump – stocks, housing, auto sales, manufacturing and consumer spending.
Kudlow never mentioned that most of those things remain far below pre-virus levels. Kudlow also referred to the pandemic in the past tense, as if it’s over and everybody’s fine now. Well, it is not over and the economy is not fine, despite what Trump or Kudlow say.
Mounting layoffs and closings
The Associated Press points out that when layoffs and closings of many businesses began in March, it was assumed this would be a temporary condition, and workers would be brought back once the health crisis eased.
However, Heidi Sheirholz, economist at the Economic Policy Institute, is worried that the recent wave of layoffs at big companies signals something more permanent. “We’re still in a terrible hole,” Shierholz said. “The fact that jobs growth is slowing is devastating.”
So what is going on? We won’t go into the lack of a proper and aggressive governmental response to the coronavirus – suffice to say it just didn’t happen the way it should have. But for several months earlier this year, there was still optimism that things would get better.
Even the banking system was optimistic, including Morgan Stanley, Bank of America Corp and others who pledged not to cut any jobs in 2020 because it was the wrong thing to do. Reuters is now reporting that with an extended recession and loan losses that come with it, bank layoffs are back on the table.
Bank economists and executives expect the U.S. economy to take longer to recover, with high unemployment into 2021 and interest rates staying near zero for the foreseeable future. Not only that, but many large companies, banks included, have found that allowing employees to work from home means they will need fewer employees to do the same amount of work.
JPMorgan Chase & Co already cut around 100 jobs in mid-July. Wells Fargo & Co resumed cutting jobs in August after putting layoffs on hold in March. A number of global banks, like Standard Chartered PLC and HSBC Holdings PLC have let go of several hundred employees this year.
Latest layoff and closing news
Casino operator MGM has permanently laid off 18,000 workers who were on temporary furlough. That number is one-fourth of its workforce. And after September 30, those 18,000 laid off workers will lose their company-provided health insurance and other benefits.
Coca-Cola – whose revenues tumbled 28 percent in the most recent quarter, plans on offering buyouts to 4,000 employees ahead of pending layoffs. The Atlanta, Georgia-based company depends of soft drink sales from restaurants, stadiums, movie theaters, and other places where people gather in large numbers.
American Airlines, barely airborne, is preparing to lay off 19,000 workers on October 1. In a letter to employees, CEO Doug Parker pointed out that an aid package for airlines Congress passed in March assumed the coronavirus pandemic would be under control by September. “That is obviously not the case,” he said.
Delta Airlines is in the same sinking boat. Delta is planning to lay off more than 1,900 pilots. “We are six months into this pandemic and only 25 percent of our revenues have been recovered,” a top executive explained to employees recently. “Unfortunately, we see few catalysts over the next six months to meaningfully change this trajectory.”
Tech company Salesforce, who just this week made its debut on the Dow Jones Industrial Average, is cutting 1,000 jobs and Bed Bath & Beyond cut 2,800 positions.
If you look at the bigger picture, and it may not be too pleasing to look at, but I am sorry, the latest layoffs and closings are only a fraction of the damage across the US economy. And if you think about it, it all ends up being a vicious cycle -with everyone affected one way or the other.
