On The Money: Five things to know about the August jobs report
Happy Friday and welcome back to On The Money, where we’re wishing you a happy and safe Labor Day Weekend. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
THE BIG DEAL—Five things to know about the August jobs report: The U.S. economy added 1.4 million jobs in August, pushing the unemployment rate down to 8.4 percent. Here are five key things to know about the state of the labor market as we head into September.
The unemployment rate dropped below 10 percent for the first time since March—even with more job-seekers: The unemployment rate sunk to 8.4 percent in August after four straight months above 10 percent, falling below the expectations of economists. The drop in unemployment also came amid a 1.2-percent rise in labor force participation. Taken together, that means that a greater number of Americans are both seeking and successfully finding jobs.
“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison,” tweeted Jason Furman, who chaired the White House Council of Economic Advisors (CEA) under former President Obama.
Permanent job losses increased after staying flat in July: While the sharp decline in unemployment rate was a welcome surprise, the August jobs report showed new signs of weakness in the labor market. The number of workers who permanently lost their jobs increased last month rose by 534,000 in August after holding steady in July. The resurgence of permanent layoffs, which now total 3.4 million, is a sign of increasing long-term damage to the economy.
“Permanent job losers now account for 25% of the 13.6 million unemployed in August, suggesting that a greater share of the jobs market damage is structural, with COVID-19 leaving deep scars,” wrote S&P Global U.S. chief economist Beth Ann Bovino in a Friday analys.
Don’t be fooled by the temporary rise in government jobs: August’s gain of 1.4 million jobs marked the second straight month of slowing job growth, a troubling distinction given the 11.5 million Americans who still haven’t found work after losing their jobs to the pandemic. That picture looks even bleaker when accounting for the 238,000 temporary Census workers that made up much of August’s new jobs.
“If you take out temporary Census jobs, this was 1.1 million. Last month was 1.7. The month before that was 4.7. The recovery is rapidly decelerating and we still have half of the lost jobs to get back, that shouldn’t be happening,” tweeted Adam Ozimek, chief economist at Upwork.
Hard-hit industries reaching limits of rebound: The return of retail and food service workers from temporary layoffs have been two of the biggest drivers of the jobs rebound. The retail industry gained 249,000 jobs in August and restaurants and bars gained back 134,000 jobs. But retailers and the food service industry are still down 655,000 jobs and 2.5 million jobs since February, respectively, and are vulnerable to further layoffs.
“Food service and retail workers are at risk of another round of layoffs in the fourth quarter when firms and individuals pull back on holiday celebrations. High-wage layoffs are expected to pick up. The challenge will be to keep employment from stumbling again in the fourth quarter,” wrote Diane Swonk, chief economist at Grant Thornton, in a Friday analysis.
This may deepen the stimulus stalemate: The mix of encouraging and disappointing news from the August jobs report will likely do little to bridge the divide between Republicans and Democrats over the scope of the next fiscal stimulus bill. While both parties agree on the general need for another bill to aid tens of millions of struggling Americans, the mixed nature of the jobs report may not change the political dynamic around negotiations.
Even so, economists have warned that the slowdown in private-sector job gains and the potential cold-weather resurgence of coronavirus cases mean the U.S. is far from out of the woods.
“We can celebrate that 2.8 million fewer people were unemployed in August than in July, but there’s still a ways to go before returning to the incredibly strong labor market that existed prior to the COVID-19 pandemic,” wrote Rachel Greszler, a research fellow at the conservative Heritage Foundation.
LEADING THE DAY
Powell: Masks, social distancing will give US ‘enormous economic gains’ Federal Reserve Chair Jerome Powell said Friday that the U.S. could reap a massive economic boost through wearing masks and maintaining social distance to curb the coronavirus pandemic.
In a Friday interview with NPR, the Fed chief gave his strongest endorsement yet of two measures experts deem highly effective at reducing the spread of COVID-19 and allowing economic activity to inch closer to normal.
“There’s actually enormous economic gains to be had nationwide from people wearing masks and keeping their distance,” Powell told NPR. I have more here.
- Powell, along with his Fed colleagues and scores of other economists, has insisted throughout the pandemic that the only way to fully recover from the recession it’s caused is to control the virus.
- Until then, they’ve warned, the inability of Americans to safely gather in large groups and close quarters — especially to dine, drink, travel or be entertained — will keep millions of people unemployed and force thousands of small businesses into bankruptcy.
Airline industry warns it won’t fully rebound until 2024: The airline industry warned it won’t fully rebound to pre-pandemic levels until 2024, Airlines for America (A4A) announced Thursday.
A4A, which represents the major U.S. airlines, predicted that demand for air travel won’t return to where it was in February and early March for a few years.
“We don’t see any significant increase in demand. We don’t see it fully rebounding until 2024,” A4A CEO Nicholas Calio said on a call with reporters. “We are doing everything we can to keep our companies afloat. People talk about the situation being dire. It is dire. Right now, we’re fighting for survival. No bones about it.”
- Passenger volumes are down 70 percent compared to year-ago levels and 29 percent of U.S. passenger airline fleets remain idle.
- Bookings are down 73 percent and booked revenue is down 86 percent, marked by the lack of business travel that produces high-quality traffic for carriers.
The Hill’s Alex Gangitano explains here.
Good to know:
- The New York Times: “As companies reconsider their long-term need to have employees on site, low-wage workers depending on office-based businesses stand to lose the most.”
- House Minority Leader Kevin McCarthy (R-Calif.) said he doesn’t want the U.S. Chamber of Commerce’s endorsement this cycle following the news that it is endorsing 23 House first-term Democrats.