Directly on par with economic expectations, the Bureau of Labor Statistics found that the economy restored 1.4 million jobs in August. But far exceeding expectations is the unemployment rate, which has abruptly fallen to 8.4%.
That comes after the Congressional Budget Office’s April projection anticipating double-digit unemployment would stay with us for all of this year and next. The Federal Reserve predicted in June that unemployment would be at 9.3% by the year’s end. And just before this report’s release, experts anticipated that our unemployment rate would fall to 9.8%, more than a full point higher than the BLS’s actual result.
All in all, the unemployment rate has nearly halved from April’s recorded record high of 14.7%, This isn’t due to more people leaving the labor force, either — that is, giving up on looking for a job and thus artificially lowering unemployment. The number of people not in the labor force who currently want a job actually decreased in August.
In short, the coronavirus recovery has continued despite Democrats’ refusal to resume negotiations with the White House to pass another round of aid. But this month’s report will likely put further pressure on House Speaker Nancy Pelosi to return to the table as the split between those temporarily laid off and those permanently widens. Temporary layoffs are down to 6.2 million from 18.1 million in April, while permanent layoffs continue to mount to 3.4 million, up by 2.1 million since February. It’s clear that economic reopenings have guided the past month of recovery. But without aid, amid school closures and states such as New York shutting down despite diminished coronavirus death tolls, the recovery will likely keep slowing down.
Furthermore, temporary government hires for the 2020 census comprised 17% of all job gains, perhaps artificially boosting the numbers a bit. The plurality of new jobs came from retail trade.
Average hourly earnings also showed a slight increase.
Meanwhile, one-quarter of those employed worked remotely specifically because of the pandemic.
As far as the political ramifications of the report go, President Trump has one more month to beef up the economy for a crucial third-quarter close. Our second-quarter GDP report showed steep economic losses but vast savings across the board. High spending encouraged by job security and government spending could deliver the third-quarter growth he needs to win reelection, but that’s contingent on Congress meeting the White House halfway on aid. This recovery is keeping on, but even if it’s exceeding expectations, it is slowing down a bit each month.
