Strong jobs report shows how the US economy has learned to live with the coronavirus
Two years after the first wave of covid-19 has caused an unprecedented closure of offices, factories and schools, it looks like the US economy is finally moving beyond the coronavirus. Last month, employers added nearly seven hundred thousand jobs on a seasonally adjusted basis, according to Friday’s monthly jobs report. The overall unemployment rate fell to 3.8%, the lowest level since the start of the pandemic. Economists were expecting positive news, due to the decline of the Omicron wave, but the report was much stronger than expected. Hiring was healthy across a wide range of industries, and the labor force grew by more than three hundred thousand people as more Americans returned to work.
As always, it’s important to note that the month-over-month employment numbers are bouncing back a bit. But the February report showed that the economy has shown continued strength: employment figures for December and January have been revised upwards, and updated figures show that the economy has created almost 1.75 million jobs in the last three months. That’s nearly six hundred thousand a month, about three times the pre-pandemic rate. Since November, the employment-to-population ratio, which is a broad measure of labor market strength, has risen six-tenths of a percentage point to 59.9%, the highest since the start of the pandemic. This too is a positive sign, especially during a time when the Omicron wave has been sweeping across the country.
Recent job gains have been strongest in some of the sectors hardest hit by the pandemic, including travel, leisure and hospitality. In February alone, bars and restaurants created 124,000 jobs; in the last three months they have added over three hundred thousand jobs. The strength in hiring has also spread to other sectors of the economy. Last month, manufacturing added 36,000 jobs; retail added 37,000; construction added 60,000; health care added 64,000; “Professional and business services” – a broad category that includes temp agencies, management consulting and technical services – added a whopping 95,000.
From a human perspective, a particularly positive development is that the number of people unemployed for six months or more continues to decline. The long-term unemployed are often those who suffer the most from economic downturns, in part because the chances of finding a new job diminish the longer one remains out of work. In 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 percent, to 1.7 million.
Despite these gains, the labor market has not fully recovered from the unprecedented contraction at the start of the pandemic. As of February 2020, the total number of Americans employed outside of agriculture was 152.5 million; two months later, that number had fallen to 130.5 million. Last month, it rose to 150.4 million. These figures indicate that much of the economic damage caused by the pandemic has been repaired, but also that much more needs to be done to create new jobs in the months and years to come. According to Harvard economists Jason Furman and Wilson Powell III, the economy would need to add about 3.5 million more jobs to catch up with pre-pandemic projections. It is not yet clear what impact the war in Ukraine and its economic fallout will have on the global economy. But the jobs report confirms that the US economy started the year with a lot of momentum.
The only gloomy element of the report is that the average hourly wage barely increased in February, which means that during this period of high inflation, real wages for workers have fallen, as incomes have lagged behind the increase. prices. It is not yet clear whether this is a statistical error or a more lasting trend. Over the past year, average hourly earnings rose 5.1% as employers in many industries were forced to raise wages to attract workers. On the positive side, slowing wage growth suggests that the recent inflation spurt is not producing a wage-price spiral, which should allay the fears of inflation hawks whose panicked calls for drastic rate hikes interest rates could inadvertently trigger a recession.
Overall, however, the jobs report was very positive, and President Biden could hardly be blamed for bragging about it. (“Today’s report shows that my plan to build an economy from the bottom up and from the middle is working to get America back to work,” he said in a statement.) Certainly, we we don’t know what the future holds. bring in terms of new variants of the coronavirus. The fact that the Omicron variant proved to be somewhat less lethal than previous variants, especially to vaccinees, no doubt helped to mitigate its impact on the economy. But it’s also true that the measures developed to mitigate the pandemic, including vaccinations, testing, and remote working — along with the large-scale financial support Congress has provided in 2020 and 2021 — have dramatically improved the ability to the economy to coexist with the virus. . After all that we have been through over the past two years, this is really a very encouraging development.