The Washington Post, and many others reported last week that the U.S. economy added 638,000 jobs in October. Still, the report was largely seen as “the latest sign that the economic recovery has slowed compared with earlier in the summer, amid rising coronavirus cases that continue to weigh on the recovery.”
The unemployment rate fell to 6.9% from 7.9%, based on data gathered during the first half of the preceding month. Eleven million people remain unemployed, the survey found — about twice the number in February before the crisis.
However, the jobs-added figure was the smallest monthly gain since May, when the economy began adding back some of the 22 million jobs lost early on in the pandemic. “The unemployment rate dropped more than expected, and on the back of an increase in the labor force and no increase in permanent layoffs,” said Daniel Zhao, a senior economist at Glassdoor, who called the report “positive” although he noted that the pandemic remains a major concern.
The gains were driven by hard-hit industries such as leisure and hospitality, which added 271,000 jobs; restaurants, bars and other food service places, which added 192,000; retail, which added 104,000; and arts, entertainment and recreation, which added 44,000.
But employment in these industries remains well below their levels from February. Leisure and hospitality is still short 3.5 million jobs; retail is down by about 500,000 jobs. Health care and social assistance, which added 79,000 jobs, is down 950,000 from February. Manufacturing gained 38,000 jobs but remains 621,000 lower than February.
The gains were offset in part by the loss of 268,000 government jobs. The majority, 147,000, were temporary census workers whose employment ended.
Kate Bahn, an economist at the Washington Center for Equitable Growth, said she was concerned that the gains were modest in industries that could be vulnerable as the pandemic results in more layoffs and restrictions.
The snapshot of the country's economic health in October arrives at a portentous moment, in the midst of a national election and a renewed debate of future economic policies, the Post emphasized.
More than 21 million people continue to draw unemployment benefits in what was often compared to the jobless crisis of the Great Depression during the height of the economic shutdown in the spring.
Congress has yet to agree on a way to extend some of the aid programs and eviction protections that many economists credit with propping up the economy during the dire first months of the pandemic. An extra $600 in weekly jobless benefits that helped many stay on top of their bills expired at the end of July.
The number of people who have been unemployed for six months or longer increased by more than 2 million to 3.6 million, the Post said.
The racial and gender disparities in employment that have been exacerbated during the crisis continue to plague policymakers. While the unemployment rate for Whites is 6%, it is 10.8% for Blacks, 7.6% for Asians and 8.8% for Hispanics.
There have been some positive signs in the economy, which has recovered two-thirds of the ground it lost during the first half of the year. Job postings, measured by sites such as Indeed and Glassdoor, have continued to rebound, although they remain well below pre-pandemic levels. Certain retail sectors have shown strength and growth, such as auto parts and dealers, building material and garden stores, and sporting goods and hobby stores.
However, the gains in jobs could further dim the likelihood that Republicans would agree to a large aid package, Senate Majority Leader Mitch McConnell, R-Ky., said. He called the report an indication of a “dramatic comeback” in the economy, and he said he would push for a more limited stimulus because of it.
Other data captures a deep stagnation afflicting the recovery. Homebase, which makes employee-scheduling software, said that the hours employees worked in October were virtually flat compared with September, the fourth straight month of near stagnation. States with cooler weather in the Northeast and Midwest saw steeper declines in the number of businesses open, it said. Data from the Ultimate Kronos Group, another scheduling-software company, had similar results, showing that shift work in the retail, food service and hospitality sectors stayed nearly flat in October.
Federal Reserve Chair Jerome Powell noted Thursday that the economy had recovered more quickly than had been initially forecast, but he also warned about the threats the economy faced from the coronavirus, as well as decreased consumer spending as some households run through their savings in coming weeks and months.
The labor-force participation rate rose slightly to 61.7%, up 0.3 percentage points — but it remains more than a percentage point and a half below its February level. The number of workers who are able to secure only part-time work rose by 383,000, to 6.7 million.
So, we will see. As the “lame duck” session approaches, the policy debates will be as fierce as ever and likely will extend into the spring and beyond, Washington Insider believes.