Are the unvaccinated responsible for the slowing economy? Not really
The Atlanta Fed’s GDPNow tracker downgraded its forecast for Q3 GDP growth again: it has now dropped from 6 percent at the end of July to 1.3 percent now. Then came the…
On December 9th, The Bureau of Labor Statistics (BLS) published unemployment data for December. According to the new numbers, the labor market landscape is changing and not for the better. Currently, long-term unemployment makes up a bigger share of total unemployment, illustrating how hard it has been for individuals to find work.
For instance, in April 2020, the share of the unemployed who were unemployed for less than 5 weeks increased to 61.9 percent, and those unemployed for 5 to 14 weeks grew to 30.4 percent. Because of the large and rapid influx of newly unemployed people, the long-term unemployed—those looking for work for 27 weeks or more—initially accounted for a declining share of the total unemployed, representing only 4.1 percent of the total unemployed in April, the smallest share since 1953.
The total number of unemployed persons began to decrease in May, when economic activity in many areas resumed on a limited basis. Despite this improvement in unemployment, the overwhelming majority of the unemployed—70.8 percent—had by that time been unemployed for 5 to 14 weeks, as much of the initial wave of unemployment remained without work and moved into longer duration categories.
Even though total unemployment continued to decline in June and July, the composition of unemployment still shifted to longer durations. By July, the largest share of the unemployed, at 39.6 percent, were unemployed for 15 to 26 weeks. In September, 6 months after the emergency declaration, the share unemployed for 27 weeks or longer was growing rapidly. By November, the long-term unemployed accounted for the largest share of the unemployed at 36.9 percent.
According to the BLS, the number of permanent job losers remained unchanged in November at 3.7 million. It is rather is still considerably higher than that of February. This trend of increasing long term unemployment presents a high risk of a recession or increased permanent job losses.
This is all than to new government-mandated restrictions that have followed a rise in cases. As illustrated by an AIER article
Government-imposed restrictions intended to slow the spread of Covid-19 continue to wreak havoc on the economy and the labor market. The longer consumers remain restricted and businesses remain closed or limited, the more uncertain a labor market recovery becomes and the higher the probability of a slow and drawn-out economic recovery.