Jobs: Hint of recovery or a blip in the data?
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Economists who expected a "train wreck" in last week's employment report were stunned to see the economy add 2.5 million jobs in May, said Jordan Weissmann at Slate. It's a sign that a few sectors of the economy have "revved back up a bit" in states that have lifted lockdowns, though "a crushing number of Americans" are still unemployed. President Trump was quick to seize credit, taking the numbers as a message that a V-shaped recovery is imminent amid a week of unrest and anger. In a press conference, he referenced George Floyd, whose death in Minneapolis ignited nationwide protests, saying "hopefully George is looking down right now and saying this is a great thing."
The latest data brought the official unemployment rate down to 13.3 percent from 14.7 percent, but the real number could actually be significantly higher, said Heather Long at The Washington Post. The jobs report is compiled from a survey of about 60,000 households every month; many "insisted they were just 'absent' from work during the pandemic." Government economists believe that most of those respondents are effectively unemployed. Without that "classification error," the unemployment would have been at 16.3 percent for May — and an awful 19.7 percent for April. Whichever numbers you use, the headline jobless rate "doesn't tell the whole unemployment story," said Alicia Parlapiano at The New York Times. Add in those who are "absent from work, probably on layoff," working part-time for economic reasons, or can't work "because of fears about getting sick or responsibilities like caring for children," and the share of U.S. adults out of work jumps to 27 percent. And while the jobless rate fell overall, it worsened for black Americans.
Yes, the plunge in the economy has "been the fastest and deepest on record," said The Wall Street Journal in an editorial, but "the economy has hit bottom and is on the way back to growth." The new numbers appear even better when you consider that the survey was taken in mid-May, before many lockdowns were eased. The Paycheck Protection Program has "succeeded in its main goal of getting small businesses to retain workers," and will help the recovery "gain speed in June." Democrats want yet another trillion-dollar rescue bill, but a new "spending binge might not be needed."
That assumption could prove dangerous, said Derek Thompson at The Atlantic. Sure, this might be the beginning of a recovery — or it could just as well be merely "a dead-cat bounce." Yet Republicans are already "backing away from further stimulus" and planning to let expanded unemployment benefits expire at the end of July. This eagerness to turn the page misses the bigger picture, said Neil Irwin at The New York Times: The economy is still "experiencing an epic collapse of demand." Some businesses may be reopening, but businesses and consumers have cut back dramatically on purchases. "When there are profound rips in the economic fabric, repairing them isn't a simple job, it isn't quick, and even what seems like a huge response often isn't enough."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.