As COVID-19 ebbs and flows throughout America, the path to economic recovery has been similarly marked by stops and starts, ups and downs. While recently termed as “on fire,” the U.S. economy has cooled back down a bit.
What caused the dramatic increase to begin with? Why the slow down? And what industries appear to face the greatest challenges getting back up to speed?
Building Material Prices & Availability
A leap in the demand during the height of the pandemic led to shortages in building materials and skyrocketing prices. Lumber has been the primary example of the volatility in the building materials market.
Contractors and DIYers who were stuck at home with nothing else to do snapped up lumber in unexpectedly high rates. High demand and low supply led to exorbitantly high prices. But the fears that this was a sign of overall economic inflation to come fell away as prices have dropped in recent months.
That being said, prices are not back to normal by any means. The supply of raw lumber does not appear to be the issue; there seems to be plenty. The continuing limitations on lumber are actually where it turns into a usable building material: at saw mills. Why the back-up here?
As it is with so many industries, the main problem lies in a reduced workforce. There just aren’t enough workers to process round logs into straight boards.
The Service Industry
Another sign of economic recovery is the fact that people want to go to restaurants again…and eat there. They want to go to the movies and enjoy other leisure activities. However, similar to the saw mills, there just aren’t enough workers yet for many businesses in the service industry to fully meet consumer demand.
Waiting tables, bartending, janitorial and other similar service professions may very well be the hardest to refill in today’s burgeoning economy. This is due in large part to what is now seen as highly inequitable pay. And, considering service jobs are often consumer-facing, there are lingering fears of COVID exposure. Low pay for high risk just doesn’t seem worth it.
That being said, some restaurants and other businesses in the service industry have started added signing bonuses and are increasing wages to appeal to the workers they so desperately need.
The Travel Industry
Similar to restaurants and retail outlets, a rise in demand to travel has met insufficient staffing and limited availability. Many recent travelers have run into an inordinate number of flights being delayed or cancelled. Hotels, bed and breakfasts, and campgrounds are booked out for months. There isn’t an available rental car in sight.
For those in the travel industry, a reduction in workers is coupled with a reduction in resources. Airlines had to mothball much of their fleets to keep maintenance costs down. Now they are scrambling to bring their planes back up to snuff mechanically, as well as getting enough pilots to fly them.
Rental car companies were forced to sell off a good number of vehicles in order to stay in business. Now, they need time to rebuild their selection, especially in popular vacation destinations.
Unemployment Rates
When the pandemic began, non-essential businesses necessarily had to cut their labor forces. Both to just stay afloat and because reduced demand meant less work anyway. Layoffs have since slowed down since normal life and demand for products and services has resumed.
However, the size of the jump in demand for things like building materials, travel and other “normal life” products and services caught those industries off-guard somewhat. And it will take some time to rehire and get the necessary workforce back up.
Another interesting trend has shown record numbers of people quitting their jobs, just at the point when it seems like things are starting to get back to normal. Pandemic worker burnout and languishing has many finally admitting dissatisfaction. That, coupled with increased savings, has allowed some to either take the extended break they feel they need or take a chance on following their bliss.
What’s Next for Our Economic Recovery?
After the initial dramatic burst back to life, it only makes sense that American economic recovery will slow back down. Until manufacturing and staffing can catch back up to consumer demand, it has to slow back down.
Without a crystal ball, the fate of the U.S. economy is difficult to predict. But all indications point to a continual recovery, slower now, but hopefully steady.
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Image credit: Olivier Le Moal – www.shutterstock.com
