Economic outlook better than expected
Published 6:00 pm Thursday, June 11, 2020
With all the “doom and gloom” rhetoric being spread around the country from the COVID-19 pandemic, the unexpected positive report about the economy last week was good news indeed.
While there are still plenty of obstacles to overcome, the Bureau of Labor Statistics’ May Employment Situation report shows that the United States economy added 2.5 million jobs last month and unemployment fell from 14.7 percent to 13.3 percent.
That is still an unacceptably high number, but at least the trend now may be going in the right direction.
In sectors of the labor force, the report showed that employment increased significantly in leisure and hospitality by 1.2 million. In construction, there was a gain of 464,000 jobs; in education, 464,000; retail trade, 368, 000; and manufacturing, 225,000.
According to the U.S. Council of Economic Advisors, these job gains surprised forecasters since many states were only just beginning to reopen their economies during the reports’ survey reference periods.
The council pointed out the rapid job growth as the coronavirus is contained and states opening should not come as a surprise. A poll conducted from April 27 through May 4 asked laid-off workers if they expected to be rehired by their most recent employers after state stay-at-home orders are lifted.
Most laid-off workers (77 percent) said it was likely they would be rehired by their recent employers. This survey result is echoed in May’s employment data, just as CEA explained it in April’s data.
The CEA also noted that beyond workers remaining attached to their employers, another sign that job growth will continue is May’s jump in average weekly hours — indicating pent-up demand. Increasing hours can be a sign that employees, average weekly hours increased by 0.5 to 34.7 hours — the highest level since the series began in 2006. For production and non-supervisory employees, this measure increased by 0.6 to 34.1 hours — the highest level in 19 years.
The stock market reacted with enthusiasm that prosperity may be returning sooner than anybody suspected. Market watchers expect the Federal Reserve is all but guaranteed to keep interest rates at near-zero during its two-day meeting this week. There is also some indication policymakers will consider deploying negative rates.
Another boost to the economy may come from another rescue package in Congress. So, there is every reason to believe the U.S. economy is on the rebound from one of the worst experiences in U.S. history.