Americans are still trying to get their arms around the idea that almost one in five workers are out of a job. Most people think it’s temporary, that everyone will be back at work in short order. But that’s not the prevailing wisdom at the Federal Reserve.
Chair Jay Powell said earlier this week that we could be dealing with lasting effects of the shutdown through next year, and now Boston Fed President Eric Rosengren says that businesses will face weak demand as long as consumers and workers are worried about public health, and the unemployment rate is likely to stay in the double digits at the end of the year. That’s not good news.
“Unfortunately, even by the end of the year, I expect the unemployment rate to remain at double-digit levels.”
Congress and the central bank are taking actions to speed the recovery, including giving away cash to individuals and qualifying businesses, as well as making hundreds of billions of dollars’ worth of loans. It still won’t be enough.
“It will not be able to assist everyone, but we expect that it will provide an important bridge for many businesses that employ much of the American workforce.”
As businesses reopen, many people will be nervous about returning to the workplace and demand for many services will stay low until those concerns are lifted, he said. Weak demand will result in weak employment.