It’s tough to find analysts that are bearish on the U.S. economy right now. Stocks are at record levels and encouraging economic data is coming out of the U.S. But the fact remains, we’re not out of the woods yet. First, the number of new COVID-19 cases in the U.S. is extremely high. On top of that, initial jobless claims in the U.S. jumped unexpectedly while the number of Americans receiving benefits of some sort is also on the rise.
How Is the U.S. Economy Really Doing?
Most economists are bullish on the U.S. economy and expect growth to springboard once the coronavirus pandemic is curtailed. The finishing line keeps getting pushed back, though. While the U.S. economy could be headed for a golden era of growth, right now, higher prices and COVID-19 continue to undermine that growth.
According to the most recent initial jobless claims, the number of Americans filing for first-time unemployment insurance rose by 16,000 to 744,000. Economists expected the jobless claims to fall to around 660,000.
Other U.S. economic data suggests things are not as rosy as first thought. Continuing claims fell less than expected to 3.73 million, while continuing claims for Pandemic Unemployment Assistance (program for gig workers and those not normally eligible for unemployment insurance) also rose to 7.6 million.
Right now, there are more than 17 million Americans receiving some sot of benefits. At the end of January, that figure stood at 16.4 million.
Despite these worrying trends, there are some who believe the U.S. Federal Reserve could take some of its stimulus off the table at the same time that President Biden is looking to increase taxes.
Should the Federal Reserve cut back on supporting the U.S. economy while the pandemic continues to rage on, it could derail the current optimism, especially when you consider tens of millions of Americans (56%) are living paycheque to paycheque, with half saying they have saved less than $500 in the past three months.
The outlook for many Americans remains grim, with 41.5% of unemployed workers being out of work for more than six months. The number of Americans experiencing long-term unemployment, defined as being jobless for at least 27 weeks, totaled about 4.1 million or 2.6% of the workforce.
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