Hope you all enjoyed the week and look forward to the last week of July coming up. Hard to believe sometimes we are heading into August. Today we will share the usual end of week unemployment report, as well as some information on the importance of staying away from another recession.
The U.S. job market remains something to keep an eye on with first-time jobless claims rising for the first time in months to 1.4 million last week and a staggering total of nearly 32 million receiving jobless benefits. That’s about 20% of the entire U.S. job market. Another 975,000 jobless “gig” and self-employed workers filed for benefits through an emergency federal program, also an increase.
Early next month we’ll see the big picture of the July jobs overall. In May and June, there was a nice little bounce back. Analysts however are predicting a net loss in July. The discouraging news from the Labor Department followed a Census Bureau survey showing that four million fewer people were employed last week than the week before. It was the fourth straight decline, suggesting that nearly all the job gains since mid-May have been erased.
Help Needed from PPP Again
The PPP loan program was intended to be a short-term measure to help get small businesses through the worst of the pandemic, but the pandemic outlasted the PPP. A good portion of those losing their jobs in late June and July are part of a wave of new layoffs from companies whose PPP money is expiring, economists say.
Although there’s no official tally on numbers of layoffs tied to companies whose PPP funding is expiring, the National Federation of Independent Business, a trade association for small businesses, found that 22% of PPP recipients surveyed have laid off or expect to lay off employees after using up their PPP loan, up from 14% in June. A recent report from Goldman Sachs found that only about one in six businesses that received loans said they were confident they could pay their employees without further assistance.
This information just heightens the need for Congress to work together to agree on a new federal funding bill. Throughout the week we’ve looked at several proposals and one that emerged was instead of a $600 bump for unemployment, lawmakers floated the idea to pay at 70% of wage before layoff. We also looked at what is going on in Europe and here is something to compare to on this front.
In Europe, countries used a different model: universal payroll aid in which governments paid as much as 80% of workers’ salaries to keep them on payroll for a longer time, which has kept more businesses afloat and less people out of work.
A second round of PPP will need to address those that have already received the funds as many are running out of money. We would love to hear from our members as to what your experience has been.
The Need to Stay Away from a Double Dip Recession
A second dip could at least rival the first, which is expected to show a gross domestic product decline of an annualized 35% or so in the second quarter. A need for reducing the new wave of cases and a vaccine of course is crucial.
We need the expected 3rd and 4th quarter bounce back to occur as hoped for. The unemployment rate could also nudge up once again after falling to 11.1% in June from a high of 14.7% in April. If people aren’t having their incomes replaced or finding new jobs, that would set the stage for the ripple effects of more credit card, auto and home loan defaults and tighter credit standards.
County Watch List
Four new counties have made it onto a list that is not wanted. A warning level label has been placed on Adams, LaSalle, Peoria, and Randolph counties after outbreaks over the last week.
Several indicators are used to determine the warning status including new cases per 100,000 people, number of deaths, weekly test positivity, ICU availability, weekly emergency department visits, weekly hospital admissions, number of tests performed, and clusters of outbreaks.
Government Shutdown Looms
Often, those in Washington DC have been accused of being inefficient. Lost in all of the talk about the next wave of federal funding tied to COVID has been the fact that the government shuts down in 68 days. A new idea has popped up amongst some on the hill – why not use this COVID package to keep the government funded until after the election?
Finally, to help small businesses recover, Google has added gift card and donation options to Business Profiles on Google Search, giving customers the ability to support their favorite local businesses during a time when they need it most. Something to check out for your organization, especially if you have not yet setup a profile on Google. You can learn more here: https://smallbusiness.withgoogle.com/help/?dclid=CJOh1ODM5uoCFUw5wQodTrUNOg#!/?utm_source=politico&utm_medium=paid-media&utm_campaign=kof_7.24AM
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry