One sign of how the economic crisis is evolving: Back in April, nearly 80 percent of unemployed workers reported being on temporary layoff or furlough. In August, that figure had fallen to less than half.
That development is the result of a combination of good news and bad. The good news is that as the economy gradually reopens, companies are recalling furloughed employees. The number of people on temporary layoff fell to 6.2 million in August, from a peak of 18.1 million in April.
But as companies reopen, many are discovering that with demand still weak, they don’t need — or can’t afford — as many workers as before the pandemic. Other companies aren’t reopening at all. The number of people reporting that their job losses were permanent rose to 3.4 million in August, from 2.9 million in July. (Another four million people were unemployed for other reasons, such as entering the labor force.)
The shift from temporary to permanent job losses is worrying, economists say, because it suggests that companies don’t foresee a quick rebound — and because it means jobless workers will have to start their job searches from scratch.
“There’s a fragility in the numbers,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “There are cracks in the underlying foundation.”
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