Optimism still lingers about recovery as country sees highest unemployment rate since Great Depression
Published 12:05 am Sunday, May 10, 2020
By Natalie Anderson
SALISBURY — Despite the national unemployment rate soaring in April, economists are anticipating a short recovery time as long as businesses can make consumers feel safe enough to visit businesses and stimulate the economy again.
The U.S. Bureau of Labor Statistics reported on Friday a national unemployment rate of 14.7%, the highest it’s been since the Great Depression. Despite hundreds of billions of dollars funneled from the federal government in an attempt to prevent layoffs, businesses across the U.S. shed approximately 20.5 million jobs as a result of COVID-19 in April alone.
As of March 15, North Carolina has paid $1.4 billion in state unemployment insurance, federal pandemic unemployment compensation and pandemic unemployment assistance for a total of 470,677 claims.
But since March 15, there have been just over 1 million unemployment filings in the state, with 907,533 of those directly because of COVID-19. While more than 16,000 claims were filed on Thursday alone, more than 50,000 claims were filed in one day’s time during the latter part of April, according to data from the N.C. Department of Commerce.
While April unemployment data was not yet available on a county specific basis Friday, Rowan ranks somewhere in the middle for initial claims filed in March due to COVID-19, with 3,747 individuals in the county filing initial claims for unemployment insurance benefits specifically because of COVID-19, according to data release by the N.C. Department of Commerce. That’s a significant chunk of the county’s estimated labor force of 65,853 in March and an overwhelming majority of the 4,303 total people in the county who filed initial claims.
Neighboring Davidson County has a larger labor force, according to data from the N.C. Department of Commerce, but also saw a significant chunk of its labor force file for unemployment specifically because of COVID-19 — 4,144 of 80,000. In Cabarrus County, 6,360 individual filed for unemployment with COVID-19 as the reason. It has a labor force of 108,426.
Data for the state and county unemployment figures for the month of April will be released on May 22, according to the N.C. Department of Commerce.
But the national numbers available to the public now may be understated, according to some economists, including North Carolina State University’s Michael Walden, who serves as the William Neal Reynolds distinguished professor and extension economist. To be counted among the unemployed, a worker must be looking actively for work, which is something many people aren’t doing because of the pandemic.
Walden said the numbers are no surprise as the nation experiences a “unique recession” that caused at least 25% of the economy to shut down, Some economists estimate up to half of the economy has shut down, he said.
But the good news, he said, is that economists anticipate seeing these numbers for a short period of time as the nation is currently in the midst of its worst quarter. Some economists predict an improvement in the unemployment rate within the third and fourth quarters. Additionally, a quicker recovery is promising if a significant enough portion of the unemployed individuals are only temporarily laid off or furloughed.
Such a prediction is anticipated based on the ability for the nation to control the virus, he said, because a resurgence could mean “all bets are off” regarding a speedy economic recovery.
Another driving force in the economy’s recovery, Walden said, is consumer fear, which is a “big unknown” until it’s discovered how many people feel comfortable going out and spending money as businesses reopen. Thus, he added, it’s important for businesses to make people feel safe during this time.
Walden said it will take both advancement in medical technology, such as a vaccine, as well as adequate caution to allow people to feel safe and begin stimulating the economy again.
Part of the consumer fear drives the possibility that some people are currently staying out of work to collect unemployment benefits until the end of July, as an additional $600 week was authorized for those individuals by the CARES Act.
Nonetheless, Rowan Economic Development Commission President Rod Crider is “hopeful” that people want to get back to work in the county. Crider said the commission is anticipating local consumers may have some “pent-up demand” as people have resorted to online shopping since businesses had to restrict in-person transactions.
The EDC, Rowan County Chamber of Commerce and Rowan County Tourism Development Authority have joined forces within the last few weeks to provide the community with resources and information regarding filing for unemployment, applying for Paycheck Protection Program loans and applying for businesses still hiring, such as Chewy and Amazon. The EDC has surveyed the local business community twice to gauge what businesses and employers are experiencing, what help they need and what future they anticipate.
Based on those surveys, Crider said, most furloughs are temporary and many businesses anticipate bringing people back to work once the economy is reopened.
Friday marked the first day of Gov. Roy Cooper’s executive order to transition some businesses into phase one, which allowed retail companies to begin operating at 50% capacity as long as they can maintain social distancing measures and practice cleaning procedures recommended by the CDC. Additionally, under phase one, parks and trails are encouraged to reopen and gatherings outside with friends are allowed.
The EDC, chamber of commerce and tourism authority are working to provide more resources aimed at economic recovery sometime next week for the local business community. Crider said the tourism sector will be promoting visiting attractions and parks while providing businesses with products like hand sanitizers to give customers.
The EDC’s goal is to continue putting into place more digital information about the local business community in an effort to continue recruiting businesses to the county. Crider said the commission has been working to ensure various sites and buildings are ready to be used for businesses that choose to relocate to the area.
And if the unemployment rate doesn’t decrease enough soon, Walden said the federal government may have to move for another round of direct cash payments to Americans. Additionally, state agencies are “feeling the pinch” and can’t obtain money the same way federal agencies can, which may require them to request more funding, as well.
Walden added that, while the economy should improve over the next few quarters, people shouldn’t anticipate a return to the national unemployment rate prior to the pandemic.
Contact reporter Natalie Anderson at 704-797-4246.