WASHINGTON (AP) – Just how severely has the resurgence of the coronavirus pummeled the United States (US) economy?
The jobs report for July released yesterday provided the clearest answer yet.
Economists forecast that employers added 1.6 million jobs, according to a survey by data provider FactSet. That would normally be a scintillating gain. Yet it would still fall far short of June’s 4.8 million increase and May’s 2.7 million gain. And it would mean that the economy has regained only about 40 per cent of the jobs that were lost when the pandemic intensified in March and triggered a deep recession and tens of millions of layoffs.
The unemployment rate declined from 11.1 per cent to 10.5 per cent, which still exceeded the highest rate during the 2008-2009 Great Recession.
Some economists said the report showed the nation lost jobs in July. Others expected the gain to be much larger. The pandemic has so disrupted the economy that the range of predictions by experts has become much wider – and less accurate – than it typically was before.
The economy cratered in the April-June quarter, shrinking at a nearly 33 per cent annual rate, as the viral outbreak shut down businesses and consumers pulled back sharply on dining out, travelling and shopping.
Growth rebounded in May and June. But the viral outbreak re-intensified in late June, doubling the nation’s daily confirmed case count to more than 60,000. Case counts have declined somewhat in recent weeks. Yet the new outbreaks have forced most states to pause or reverse their re-openings – closing entertainment outlets, discouraging travel and limiting shopping and indoor dining for a second time, all of which has likely slowed hiring.
Even when the economy does rebound, it’s likely to do so, at least initially, with fewer jobs.
Once an economy starts to recover, companies typically try to derive as much production from their existing employees as they can before taking the risk of hiring more people.
The Institute for Supply Management reported in two surveys this week that both manufacturing and service sector companies expanded output and sales faster in July than in June.
Even so, companies in both surveys reported that they were still cutting jobs.
Some other recent data points to a weak month for hiring. The Census Bureau has found in weekly experimental surveys that the number of people with jobs fell 6.7 million in July, which points to a huge drop in the official figures. In June, the same set of surveys had shown a gain of 5.5 million, close to the government’s official figure.