Among mounting signs of recovery from the pandemic and recession, it’s taking longer for out-of-work members of the labor force to find employment. It now takes almost 30 weeks on average to find a job, with a median of more than 19 weeks. Both of those measures are far above what would normally be expected in the pre-financial crisis era.
As our analysis shows, increases in duration of unemployment tend to occur both during a recession and during the months (and years) after the recession has passed. An economic downturn often prompts business retooling and closures. The startup time for new enterprises—as well as employee retraining and relocation—cannot be expected to happen overnight.
As of May, there was a 6.5 million-job deficit of private sector employment (compared to before the economic shutdown) and a 1.2 million-job deficit of government employment that need to be closed. The Federal Reserve has a dual mandate of price stability and full economic output and employment. So in the absence of wage-push inflationary pressures, we anticipate that the Fed will be patient for now, ignoring transitory price increases and waiting for the inevitable post-recession shakeout to run its course.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.