The US economy is still down roughly 8.4 million jobs since the pandemic first fueled massive layoffs. That suggests hiring would quickly bounce back as the country reopens and Americans get back to spending as usual. But the opposite effect is taking place. Instead of an oversupply of workers meeting weaker demand, businesses looking to hire are coming up againstThat shortfall is presenting an unusual and unexpected challenge to the broader recovery.
Bank of America economists aren't particularly concerned. The shortage is likely driven by expanded unemployment benefits included in the latest stimulus package, concern around catching the coronavirus, and home-schooling demands for working couples, the team led by Michelle Meyer said in a Friday note. The bank expects that dynamic to fade by early 2022 as stimulus expires and more Americans are vaccinated.
"Therefore by early next year, COVID-related labor shortages will likely be replaced by 'traditional' shortages because of a hot labor market," the economists added. The team reiterated its expectation for the unemployment rate to fall to 4% by the end of 2021. The rate currently sits at 6%, but the government's latestStill, the"traditional" labor shortages expected to emerge next year will present new constraints, according to the bank. The red-hot labor market could"make it difficult" for ports to reach pre-pandemic employment levels even after the health crisis ends, the team said.
If only there was a way to entice workers into working for a particular company.
You mean after we stop paying people extra to not work? Shocker.
I bet you guys love some BofA.