The economy of the United States has been growing even though the number of people infected with COVID-19 rose and the federal aid came to an end. However, millions of Americans who have lost their jobs are feeling left behind or under a threat. Hiring increased in August and consumer spending did not drop. People keep buying new homes and cars. So the economy has been stronger than anticipated. Yet those who have lost their jobs find themselves in more difficult positions than before and the divide between the poor and the rich grew.
If you compare two industries such as finance and hospitality, you will find that the unemployment rate in the financial industry in August was 4.2%, which is slightly higher than it was before the pandemic in march. Hospitality at large, that is including travel, tourism and restaurants had 21.3% of unemployment last month. Traditionally, the hospitality sector pays less to its employees than the financial industry.
The fact that consumer spending did not drop is because the workers of the industries such as the financial industry keep purchasing. TS Lombard chief economist Steve Blitz said that 80% of non-essential spending is done by 20% of the wealthiest Americans. That is what makes the recovery look good when in reality the unemployment rates are still very high.
The digital economy is the only way out?
While the traditional industries including the hospitality, arts, and tourism sectors, along with travel and even music almost completely closed down during the pandemic, the digital economy managed to keep the unemployment rates almost as low as before the pandemic. People rely on digital technologies not just for work but also for education, socialization, and entertainment. Amazon, Netflix, Facebook (as you can get likes and shares on Facebook), and other leading tech platforms had more users during the pandemic than before. It is probably the only branch of the economy that has more profits now than before the pandemic.
However, even some digital industries suffered. The start-ups found it harder to maintain their employees and keep their companies running. Yet many other digital businesses and the businesses that adopted digital technologies managed to keep working and keep their employees.
West Coast wildfires could spark a financial crisis
Over 85 wildfires are burning through California, Washington, and Oregon. In 2020 wildfires have already destroyed over 3 million acres and because of the Climate Change it is getting worse. The wildfires destroy the forests, the natural habitat of wildlife, people’s homes, and threaten the economy. The COVID-19 pandemic was already a big blow to the economy and the industries that were particularly vulnerable such as tourism will suffer even greater losses.
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The home value drops and the local governments spend a lot on the recovery after wildfires from their budget. After these kinds of setbacks, it usually takes the economy years to recover. California is also home to tech giants such as Google, Microsoft, and Apple. If the companies decide to relocate because of their workers’ lives and health will be endangered the state will suffer an almost irreparable blow to its economy.