Key Highlights

  • 8M jobs added in June before spike in COVID infections
  • Unemployment rate dipped to 11.1%

Employers added a record 4.8M jobs in June following May’s uptick of 2.7M jobs. The only caveat to this latest month-long jobs report from the Labor Department is that this snapshot of the economy was taken in mid-June before the now record spike of COVID infections began sweeping across the country.

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The unemployment rate dropped to 11.1% in June with the leisure and hospitality sector of the work force capturing 40% of the job gains. (Just remember the unemployment rate in February of this year was 3.5% and then 14.7% in April.) The Labor Department said that the unemployment rate would have been approximately 1 percentage point higher, or approximately 12.1%, if there hadn’t been data collection problems.

Needless to say, President Trump was ecstatic about June’s job gains. “Our economy is roaring back,” Trump told reporters. Treasury Secretary Steven Mnuchin was a bit more measured. “We’re going to be concerned till every single person is back to work.” And Federal Reserve Chairman Jerome Powell was more cautious when he commented that the economic outlook continues to remain “extraordinarily uncertain.” Powell had testified before the House Financial Services Committee earlier in the week that, “A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”

The Labor Department also released its weekly unemployment tally on July 2. This more timely data indicated that 1.4M workers filed new claims for state unemployment benefits and more than 800,000 workers filed for benefits under the federal Pandemic Unemployment Assistance program.

According to Betsey Stevenson, a member of the Council of Economic Advisers under President Obama and now at the University of Michigan, said, “The virus drives the economics.” Most economists agree with Stevenson on the now surging COVID pandemic causing cities and states to pause re-openings and/or re-close restaurants, bars and other businesses in states such as California, Texas, Florida and others..

James Sweeney, chief economist with Credit Suisse Group AG, said, “We’ve got big forces at work here.” On top of questionable data collection, claims figures inflated by states’ backlog clearing and the miscalculation of some out-of-work workers as employed, Sweeney said, “…more recently you have the new wave of infections slowing the return (to work). So, this is tricky.”

 

Thanks to National Public Radio, BloombergNews and The New York Times.

 

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