By M. Ray Perryman, PhD, CEO and President
Overview –In March, the US economy added 916,000 jobs, led by gains in leisure and hospitality, education, and construction. The unemployment rate fell to 6.0% and the number of unemployed persons dropped to 9.7 million. Overall, the economy is in a much better place than the lows experienced in April 2020, but has not yet recovered to pre-pandemic levels.
Employment – Another positive sign and a major milestone in the recovery is that initial claims for state unemployment benefits in the U.S. fell to 658,000 in late March, below 700,000 for the first time in a year. This weekly statistic represents the first filing for unemployment for a specific claim, and is essentially a signal of layoffs or jobs that have recently been eliminated. Although initial claims is not a data series widely followed due to its volatility, it received more headlines during the pandemic as a weekly barometer for how the economy was faring.
Since records have been kept, the highest numbers the US economy had ever seen were 695,000 at the worst of the 1980s downturn and 665,000 during the Great Recession over a decade ago of the 2008-09 timeframe. That was, however, before the pandemic surfaced. In early 2020, as the economy was in its eleventh year of expansion, initial claims were lower than they had been in decades at around 200,000 (there are always some initial claims due to the churn in the economy). For the week of March 7, 2020, initial claims were 212,000. Just a little under a month later on April 4th, they were 6,149,000 (almost ten times the historic high).
To cross below 700,000 new claims finally puts the economy back to a place it has been before. Claims remain high by any standard, but are not unprecedented. Equally important, when the economy has seen this level in the past, a successful return to prosperity occurred in a reasonable amount of time. Even though levels may rise above 700,000 at times (and, indeed, have done so in subsequent weeks), the fact that the economy has trended below that benchmark is notable.
Economic Outlook – The US economy is expected to continue to recover and see significant growth. The Perryman Group’s most recent projections indicate real gross product is projected to increase by +7.71% through 2021 on a year-over-year basis, with +3.68% growth in 2022. Job gains are forecast to be +4.04 million through 2021, with a gain of +3.94 million jobs the following year.
As the pandemic continues to recede, growth potential is enhanced. While the recovery will no doubt remain somewhat uneven and many challenges lie ahead, the US economy is likely to see notable economic expansion and relief from the pandemic stress.
About Dr. M. Ray Perryman and the Perryman Group
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.