While the US economy has managed to grow dramatically over the summer, it is slowing down and full recovery is still out of the horizon.
According to official numbers, the US economy has grown at a record 33% annual rate in the past quarter ending September 30, reversing the downward trend earlier this year. However, this is still 2.9% lower compared with the same quarter in 2019.
The official data comes as some analysts warned that the economic recovery may lose traction.
US unemployment and job cuts
The figures also indicated that the unemployment rate has declined from the 14.7% high recorded in April to 7.9% last month. This was after the federal government poured in aid, allowing businesses to reopen, employers to recall workers and shoppers to return to restaurants and stores.
However, after the initial boom in activity, job growth has decelerated and employers are yet to recall over 10 million jobs cut during the spring. Furthermore, some big companies have even announced additional layoffs, including aircraft manufacturer Boeing, financial firm Charles Schwab, and media giant Walt Disney.
Boeing said it will further reduce its workforce by 7,000 jobs as its losses pile up following revenue decline. The company announced that it expects its workforce to be at around 130,000 jobs by the end of the year.
In its latest quarterly report, Boeing posted a loss of $754 million, excluding special items, as revenue decreased by 29% or $5.8 billion. The aircraft maker has halted new plane deliveries and are canceling orders as air travel demand further decline due to the coronavirus pandemic.
During the earnings call, Calhoun noted: "The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality."
Meanwhile, Charles Schwab announced that it will lay off 1,000 employees a few weeks after completing its merger with TD Ameritrade. According to the firm, the job cuts are part of an initiative to "reduce overlapping or redundant roles" across both firms.
In a statement to employees, the Schwab Executive Council said: "We have begun notifying individuals that their roles have been eliminated and they will be leaving the firm. This will result in a reduction of approximately 1,000 positions or about 3% of the combined workforce of Charles Schwab and TD Ameritrade."
However, Charles Schwab did not specify which teams and roles will be affected by the layoffs.
Last month, the Walt Disney Company said it will lay off 28,000 employees in the US due to the impact of the coronavirus pandemic on its parks and resorts business.Disney said the affected jobs will be those from its Parks, Experiences and Products unit and that 67% of the employees to be laid off will be part-time workers.
Outlook for the US economy
Aberdeen Standard Investments senior global economist James McCann said: "This is going to be seized upon by both ends of the political spectrum as either evidence of the strength of the post-lockdown economic rebound or a cursory warning that the gains could be short-lived."
Economists are worrying that the growth will fall in pace in the fourth quarter as Covid-19 cases are surging again, mixed with fears of renewed lockdown restrictions.
Moody's Analytics' Back-to-Normal Index shows that there has been barely any change economic activity in the past weeks.
