It’s a little secret in the news industry that for certain anticipated events, like a Supreme Court ruling or the death of a prominent person, we pre-write a large portion of an article or different versions. of it so that we can post quickly once the news occurs.
That’s why there is now a draft of this article that explains how April’s employment figures show what a high-speed economic recovery looks like. It was completely wrong.
Employers added just 266,000 jobs last month, the government reported Friday morning, not the million or more forecasters expected. The unemployment rate actually rose slightly, to 6.1%.
The details of the new numbers are confused. Interim fell sharply (-111,000 jobs), while hiring in the leisure and hotel sector is robust (+331,000 jobs). It will take time to understand why so many dominant predictions were so wrong – modest job creation is out of step with what other indicators have suggested – and whether some of the weak results are more of a statistical outlier than reality. .
But if robust job growth does not return quickly, that will be of great concern. The economy is still 8.2 million jobs short from its February 2020 level. The great hope was that employers would quickly fill this gap, bringing the United States back to its full potential in no time.
The status of jobs in the United States
The pandemic continues to impact the US economy in multiple ways. A key factor to watch is the labor market and how it changes as the economic recovery progresses.
Even if you think of April as an outlier, job growth has only averaged 524,000 per month over the past three months, a pace which, if continued, would imply a long return to growth. full health. That certainly doesn’t signal the kind of rapid boom that many forecasters have started to expect and that the Biden administration and the Federal Reserve are hoping for.
These numbers are consistent with the story told by many business leaders of severe labor shortages – this demand has increased but employers cannot find enough workers to meet it, at least not. to the wages they are used to paying. Many employers and conservatives argue that expanded federal unemployment benefits have been too generous (they were extended as part of the recent pandemic rescue package and are set to expire in September).
Citing the jobs report, the Chamber of Commerce on Friday called for an immediate end to the $ 300 weekly supplement to unemployment benefits.
Weak job growth in April was accompanied by large wage increases. Average hourly wages rose 0.7%, which in itself isn’t too bad. And in some industries, wage increases have been blockbuster, including a 4.8% increase in average hourly leisure and hospitality earnings – in just one month.
It should be noted that the labor force is growing – an additional 430,000 Americans were working or looking for work in April – so this is roughly the opposite of the situation after the 2008 recession, when wages were slowly rising and millions of people were leaving the workforce. .
Yet, it is still possible that many people remain reluctant to return to work for a variety of other reasons: having to care for children who are away from school; fear the coronavirus; reconsider their career.
In 2010, the Obama administration introduced one of the most unfortunate business messaging concepts of decades, announcing that a “summer of recovery” was underway. It became a mainstay, because while the economy was expanding, Americans were much worse off than they had been before the 2008 recession, and the improvement was coming very slowly.
It’s an outcome the Biden administration is desperate to avoid.