Navigating Economic Recovery Business Insights from the USA and Canada

  This year, too, the various rounds of stimulus are likely to help the government spend more. Total consumer spending and GDP growth are two measures of the health of the economy as a whole that show that it is fully recovering this year.

The job market is one part of the U.S. economy that will likely take longer to get better. The April jobs report showed that the U.S

economy had 8.2 million fewer jobs than it did before the recession in March of last year.2 More importantly, the job losses were not the same in every industry, income level, or population group.

Even though every major business lost jobs during the recession, the leisure and hospitality sector was by far the worst hit. The business world still had 2.8 million fewer jobs in April than it did in January 2020. There is also strong proof that the people who lost their jobs were lower-income because the industry that was hit the hardest had an average hourly wage that was 42% less than the U.S. average.

People with only a high school education, women, and Black or African American people were the most affected by the pandemic.3. Economists look at the employment-to-population ratio as a way to compare the health of the job market across different groups of people. This calculation shows how many people in each group are working as a percentage of the total number of people in that group who are working age. The employment-to-population rates for all three groups are lower than the U.S. average (see chart below).

We think that both monetary and fiscal policy will stay loose well into the expansion part of this economic cycle. There are still risks to the prospects, even with all this support. One of the biggest risks is not knowing how well the vaccine will work against new types of COVID-19. There could be a big problem for economic growth if the number of cases goes up to the point where more limits are needed. The revival could also be at risk when some of the financial aid is taken away. Later this year, there may be a rise in credit failures as mortgage forbearance programs end and student loan payments start up again before some of the hardest-hit groups are back at work. There are some risks, though, that are not all bad.

If hiring and spending pick up faster than we think they will, growth could easily go above and beyond our current forecast for this year. This would mean that job growth would pick up much more evenly

Early March 2020

The drop in the value of stocks around the world in February 2020 affects fixed income markets as well. These markets start to sound the alarm as liquidity in key loan markets starts to dry up at the worst possible time for companies affected by the pandemic.

A series of interest rate cuts are made by the Federal Open Market Committee (FOMC) of the Federal Reserve. The first cut is by 50 basis points, and the second is by 100 basis points less than two weeks later, on March 15.

It also starts buying U.S. Treasuries and mortgage-backed securities. This is part of a program called quantitative easing (QE), which was last used during the financial crisis.

The week of March 20, 2020

Around 3.3 million people file their first claims for unemployment benefits in just one week, which is the most in any week since the series began in 1967.

As more states put limits on payments to fight the outbreak, the number of payments going through Visa's system starts to drop quickly.

The second quarter of 2020

In response to the financial crisis, Congress has passed three stimulus bills that add up to $1.9 trillion.

The CARES Act is the biggest of the three packages. It's worth $1.7 trillion and includes direct cash payments of $1,200 per person and $500 per child for most Americans. It also includes expanded unemployment insurance for those who are furloughed, such as gig workers and freelancers, and an extra $600 per week for people who are unemployed.

Late in April, a new $483 billion stimulus plan is signed into law. This package includes money to renew the Paycheck Protection Program for small businesses and more money for hospitals and COVID testing.

In March and April 2020, nominal consumer spending goes down. In April, spending goes down 16.4 percent year over year

There are a lot more COVID cases now, and many states are putting limits back in place to try to stop the spread.

The healing slows down. Late in December, Congress passes another $900 billion stimulus plan. This package includes direct cash payments of $600 per person for people making up to $75,000 per year, an extension of unemployment benefits, and a $300-per-week boost payment for people who are out of work.

The first half of 2021

With a new Congress and leadership comes a new set of policy goals.

The American Rescue Plan (ARP), which is another round of stimulus, is put into action. It will cost $1.9 trillion. To go over it again, the stimulus package includes a lot of different parts. It includes more direct payments to people, bigger jobless benefits, money for state and local governments, and more.

The United States has used a total of $5.3 trillion, or 25.3% of its nominal GDP, in fiscal support since April of this year.

Aside from the stimulus packages, actions taken by the current and past administrations, such as delaying student loan payments and stopping mortgage foreclosures and rental evictions, also help to delay and maybe even lessen the effects of the downturn on credit.