AFTER A COLD winter, America’s jobs market is regaining some warmth. In February payrolls in the world’s largest economy rose by a net 379,000 jobs, surpassing expectations of a rise below 200,000. The unemployment rate fell a touch, to 6.2%. Even at this pace, America would take another 25 months to reattain its pre-covid level of jobs. But the economic recovery is getting back on track.
After unemployment climbed to nearly 15% last spring, America’s labour market roared back to life in the summer and autumn. In June rate-setters at the Federal Reserve forecast that the unemployment rate at the end of 2020 would exceed 9%. In fact unemployment dropped below that level in August after four consecutive months of net job growth in excess of 1.5m. Unemployment fell so fast in part because many people returned to their old jobs, in part because companies such as Amazon went on a hiring binge and in part because of a boom in startups, as entrepreneurs looked to fill gaps in the market created by the pandemic.
This recovery slowed during the winter largely because of another sharp rise in coronavirus cases. In December the labour market even shed jobs. But in recent weeks the daily rate of new infections has steadily fallen, alongside a steep decline in hospitalisations and deaths from covid-19. That has allowed some economic activity to restart. Another slug of stimulus cash, in the form of cheques worth up to $600 and more generous unemployment benefits doled out at the turn of the year, has also helped.
Data from OpenTable, a booking platform, point to a recovery in employment in hospitality, one of the hardest-hit sectors. A measure of weekly output constructed by Nicolas Woloszko of the OECD, a rich-country think-tank, which analyses data from Google Trends, suggests that in the second week of January American GDP was more than 3% smaller than in January 2020. By the end of February, however, it was down by only about 1.5% from a year earlier.
The big question now is whether the jobs market will repeat last summer’s performance. The pessimists say a rapid rebound cannot last. The number of Americans who are “long-term unemployed”—ie, out of work for 27 weeks or more—continues to rise. For people in that unfortunate position it is more difficult to find work, even if it is available. Others fear that in the post-pandemic world the demand for some goods and services that typically employ a big chunk of low-wage workers, such as hospitality and leisure, will be structurally lower. The spread of new variants of the coronavirus could result in another round of stay-at-home orders.
But there is a strong case for optimism. The experience of places such as New Zealand and Australia is that once the threat of coronavirus has passed, people are keener than ever on being out and about. Meanwhile the vaccine roll-out continues to accelerate. In a report on March 3rd Goldman Sachs, a bank, forecast that 50% of Americans will receive a first dose of vaccine by May, putting America behind only Britain in that regard among big countries. The Senate is considering another $1.9trn in stimulus, including cheques of $1,400 to most Americans. The job market has been deeply wounded. But there are growing reasons to hope that it might heal rapidly.