A Strong Jobs Report Shows How the U.S. Economy Has Learned to Live with the Coronavirus – The New Yorker

Two years after the first wave of COVID-19 prompted an unprecedented shutdown of offices, factories, and schools, it looks like the U.S. economy is finally moving beyond the coronavirus. Last month, employers added close to seven hundred thousand jobs on a seasonally adjusted basis, according to Fridays monthly employment report. The over-all unemployment rate dipped to 3.8 per centthe lowest level since the onset of the pandemic. Economists had been expecting positive news, owing to the decline in the Omicron wave, but the report was far stronger than expected. Hiring was healthy across a broad range of industries, and the labor force expanded by more than three hundred thousand people, as more Americans returned to work.

As always, it is important to note that month-to-month job figures bounce around quite a bit. But the February report showed that the economy has displayed sustained strength: the employment figures for December and January were revised upward, and the updated figures show that the economy has created almost 1.75 million jobs over the past three months. Thats close to six hundred thousand a monthroughly three times the rate before the pandemic. Since November, the employment-to-population ratio, which is a broad measure of the labor markets strength, has risen by six-tenths of a percentage point to 59.9%, the highest since the pandemic began. That, too, is a positive signespecially during a period when the Omicron wave spread across the country.

The recent job gains have been largest in some of the sectors that the pandemic hit hardest, including travel, leisure, and hospitality. In February alone, bars and restaurants added 124,000 jobs; over the past three months, they have added more than three hundred thousand jobs. Strength in hiring has spread to other parts of the economy as well. Last month, manufacturing added 36,000 positions; retail added 37,000; construction added 60,000; health care added 64,000; professional and business servicesa broad category that includes temp agencies, management consulting, and technical servicesadded an impressive 95,000.

From a human perspective, one particularly positive development is that the number of people who have been out of work for six months or more continues to fall. The long-term unemployed are often the ones who suffer the most from economic downturns, partly because the chances of finding a new job drop the longer you are out of work. During the first year of the pandemic, the number of long-term unemployed rose to more than four million. That figure has now dropped by about sixty per centto 1.7 million.

Despite these gains, the labor market hasnt fully recovered from the unprecedented contraction at the start of the pandemic. In February of 2020, the total number of Americans employed outside the farming sector was 152.5 million; two months later, that figure had fallen to 130.5 million. Last month, it climbed back to 150.4 million. These figures indicate that much of the economic damage that the pandemic wreaked has been repaired, but also that there is still plenty of scope for further job gains in the months and years ahead. According to the Harvard economists Jason Furman and Wilson Powell III, the economy would need to add about another 3.5 million jobs to catch up with the pre-pandemic projections. Its not clear yet what impact the war in Ukraine, and its economic fallout, will have on the global economy. But the jobs report confirms that the U.S. economy started the year with a great deal of momentum.

The one bleak element of the report was that average hourly earnings barely rose in February, which means that, during this period of high inflation, workers real wages fell as earnings lagged behind rising prices. Its not clear yet whether this is a statistical blip or a more lasting trend. Over the past year, average hourly earnings have increased by 5.1 per cent, as employers in many industries have been forced to raise wages to attract workers. On the upside, the slowdown in wage growth suggests that the recent surge in inflation isnt producing a wage-price spiral, which should ease the fears of inflation hawks whose panicked calls for drastic interest-rate hikes could inadvertently spark a recession.

Over-all, though, the jobs report was very positive, and President Biden could hardly be blamed for crowing about it. (Todays report shows that my plan to build an economy from the bottom up and the middle out is working to get America back to work, he said in a statement.) To be sure, we dont know what the future may bring in terms of new variants of the coronavirus. The fact that the Omicron variant proved somewhat less deadly than previous variants, especially to the vaccinated, undoubtedly helped to mitigate its impact on the economy. But it is also true that the measures developed to mitigate the pandemic, including vaccinations, testing, and remote workingand also the large-scale financial support that Congress provided in 2020 and 2021have greatly enhanced the economys ability to coexist with the virus. After all weve been through in the past two years, that is a very encouraging development indeed.

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A Strong Jobs Report Shows How the U.S. Economy Has Learned to Live with the Coronavirus - The New Yorker