Question

Based on dynamics of past economic recoveries in the US, predict what is likely to happen to the US LFPR and Unemployment Rate (U-3) right after the COVID recession is over? Please explain your reasoning.

Answer 1

First, the most obvious way is that unemployed people find jobs and become employed. Labor force participation remains the same, while the number of unemployed decreased and the number of employed increased. The second way is that people not currently counted in the labor force become employed.

new report comes by the Commerce Department said the US economy shrank 4.8 per cent in the first three months of 2020.

The newly released report adds that every major sector of the labour market had job losses, with particularly heavy declines in the non-essential leisure and hospitality industries.

The Labor Department also reported 33 million filings for first-time unemployment benefits by Americans over the past seven weeks, indicating more job losses to come.

The US government has already announced about $3 trillion in Covid-19 relief in previous packages, including more than $2.1 trillion in the initial coronavirus Aid, Relief, and Economic Security (CARES) act