By M. Ray Perryman, PhD, CEO and President
Overview – June saw a strong acceleration in the pace of recovery in the job market. Total nonfarm payroll employment in the US rose by 850,000 according to the US Bureau of Labor Statistics, and more than 1.7 million jobs have been gained in the last three months. Since the worst of the decline in April 2020, US employment has risen by 15.6 million. Nonetheless, it remains 6.8 million (4.4%) below the peak in February 2020.
A major driver of hiring has been the reopening of restaurants, bars, and entertainment venues and the resumption of travel. Employment in leisure and hospitality increased by 343,000, with more than half of the gain in food services and drinking places (194,000). Accommodations jobs were up 75,000; arts, entertainment, and recreation added 74,000. The recent recovery has occurred very rapidly and efficiently. However, some restrictions remain in various areas, and employment in leisure and hospitality is still down 2.2 million from pre-pandemic levels.
Even with the strong uptick, both the unemployment rate (5.9%) and the number of unemployed persons (9.5 million) held fairly steady, reflecting the effects of an increase in the labor force as people are being encouraged to jump back into the market. The number of people indicating they could not look for work due to the pandemic dropped from 2.5 million in May to 1.6 million in June. Weekly initial claims for unemployment have also plummeted in recent months. Both the rate and number of people unemployed are well below highs reached last spring, though they are substantially above rates prior to COVID-19 (3.5% and 5.7 million).
As business picks up, workers are transitioning back to full-time hours, and the number of persons employed part time for economic reasons (meaning they would prefer a full-time job) decreased by 644,000 to 4.6 million. Wages are also rising as companies compete for employees.
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 +7.15% through 2021 on a year-over-year basis, with +3.88% growth in 2022. Job gains are forecast to be +3.33 million through 2021, with a gain of +6.69 million jobs the following year.
As stated last March, this recession was not caused by a structural problem (the normal case). Consequently, the economy could not fully recover until we conquered the virus but could surge quickly thereafter. That pattern is now unfolding. Assuming we avoid spikes in severe cases, there is every reason to expect growth to continue (although the pace will likely be uneven).
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.