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Eric Rosengren, Boston Federal Reserve President, said Friday that despite job creations last month, the economy’s total recovery wouldn’t likely happen until the COVID 19 pandemic is under full control.
In August, unemployment rates fell at 8.4 percent while non-farm payrolls increased at 13.7. The U.S. Labor Department said that these numbers were far better than what Wall Street predicted. A reduction in jobless rates was very noticeable, moving 1.8% from July. All these as the labor market starts to mend.
Rosengren said that this impressive improvement should not be taken lightly as the economy is still under pressure. He said that the U.S. economy is yet to recover, but the employment report is something positive.
Rosengren also cited gains in the hospitality and retail sectors. These were the hardest hit during the coronavirus pandemic as consumers remained at home due to quarantines and other government restrictions. He said that these sectors might take a long time before they can recover or at their pre-coronavirus pandemic situations.
Recent reports say an 8.4% unemployment rate, and Rosengren noted that this is a significant recession. It can take a long time before many people can go back to their previous financial conditions. It can also take longer if there is no safe vaccine to use. He states that it can also take longer for people to notice a normalizing effect.
The Feds has tried to improve the situation by considering short-term interests near zero and using new liquidity and lending programs. Also, there are further plans to deal with inflation that may keep interest rates low until unemployment rates recover.
In August, around 22 million Americans signed up for unemployment assistance after President Trump declared a national emergency state. A staggering number of jobs lost after years of employment gains.
According to a Washington Post report, the U.S. has not seen this unemployment level since the Great Depression. Every sector has businesses laying off employees, while some companies were forced to shut down to prevent the spread of COVID 19. The manufacturing industry and home construction have seen the most significant decline in jobs in almost 40 years.
The report from the U.S. Bureau of Labor Statistics released this Friday said that around 1.37 million jobs were added in the month of August. The 4th month of employment additions continues as the economy slowly returns from a recession due to the coronavirus.