by The Perryman Group
Dr. Ray Perryman, president and CEO of the Perryman Group
The U.S. job market has recently shown signs of recovery, though total employment remains well below pre-Covid-19 levels. The most recent U.S. jobs reports indicate gains of 2.7 million jobs in May and 4.8 million in June, with a decrease in the unemployment rate from 14.7 percent in April to 11.1 percent in June. However, the total increase over the past two months is far below the loss of 22.2 million during March and April. Moreover, the recent increase in Covid-19 infections may cause the recovery to slow. The situation remains challenging and fluid, and the recovery will likely be bumpy.
There are two countervailing forces in the job market. Many companies are continuing to struggle and lay off workers. While initial weekly jobless claims have fallen substantially from peak levels, they remain almost twice as high as the previous records set during the 2008 recession. Simultaneously, as the economy reopens, some of the most labor-intensive segments (such as retail, bars and restaurants, and personal services) have been hiring in large numbers (at least as of the time the employment data was collected, and recent heightened restrictions may reverse this trend). On balance, there was improvement in overall employment in May and June.
It should take about two years to return to prior peak levels even with no major additional disruptions. Health and safety remain of paramount concern, and progress will depend on the ability to continue to resume activity without infections reaching a level that will necessitate a new wave of restrictions. The current economic crisis was caused by a health crisis, and to ultimately resolve the economic crisis requires effectively dealing with the pandemic situation.
The Perryman Group’s latest forecast calls for a decrease in real gross product of -4.96 percent this year, with a gain of 3.67 percent in 2021. Employment is projected to decline by 6.25 percent for 2020 and rise 4.78 percent next year. Compared to last quarter’s forecast, the outlook has become slightly less negative for this year as businesses have been allowed to reopen, but worse for 2021 as cases have escalated and progress on dealing with the health crisis has been slow, thus permitting a somewhat less robust comeback.
The Perryman Group’s expectations indicate that 2021 will see the U.S. economy recover a significant part of activity lost this year. Once a lasting solution to the Covid-19 issue can be developed, longterm prospects for the economy remain positive.