Friday has been an economic victory for the United States; one we have been desperate to see for months. “Defying predictions of additional layoffs in the wake of the coronavirus” the unemployment rate actually dropped last month, and 2.5 million jobs were added, reported National Review.
Economists and predictions suggested the unemployment rate could reach 20 percent or higher. However, in the first sign of economic positivity since the COVID-19 pandemic, unemployment hit 13.3 percent, falling since the previous month’s 14.7 percent in April.
Stunningly, the National Review reported “the job numbers report the largest monthly increase in employment since 1939” which according to Seema Shah, chief strategist at Principal Global Investors “suggests that the US economy is more resilient than expected.”
The Bureau of Labor Statistics credits the reopening of businesses that were forced to be shut during the coronavirus pandemic as a partial explanation for the fall in the unemployment rate. As for job gains, the majority were in the businesses of restaurants, construction, healthcare, and retail.
An additional boost to the economy was signed by President Trump today. Trump signed the bipartisanship bill, Paycheck Protection Program Flexibility Act (PPPFA) to ease restrictions on small businesses using Paycheck Protection Program (PPP) funds.
Restrictions eased in the PPPFA included businesses only needing to devote 60 percent of funds received from the loan for payroll instead of 75 percent. The new bill also allows businesses to spend the funds in a 24-week period instead of the original 8 weeks. “Business owners clamored to have the flexibility to spend the loan after reopening, especially on payroll when workers returned to work and were not sitting idle” according to Forbes.
Another issue solved by today’s bill is the deadline to rehire workers. Initially, the PPP required all workers to be rehired by June 30th of this year in order for the salaries to count towards forgiveness. As June 30th quickly approaches, many COVID-19 safety measures are still in place, so now businesses have until December 31, 2020. Loan repayment terms were also amended, giving businesses five years at 1% to repay portions of the loan that is not forgiven. Initially, the repayment term was two years.