We may be one of the few people who don’t like surprise parties, so taking that a bit further, the U.S. Labor Department’s May Jobs Report gave a real jolt to many economists, and observers, that there was actually a gain in non-farm payroll jobs, to the tune of 2.5 million for that month, as with more than a grain, or two of logic, expected a deep drop after the arrival of the pandemic COVID-19.
If 13.3 was the unemployment rate, were all asleep at the proverbial wheel? Adding to the confusion was the disclaimer that was put on the report that the numbers may be wrong.
Then the specter of 8.1 million people misclassified? More confusion, then another look revealing that the more accurate figure was 16.4 percent. Adding that figure to the mix, it was still better than 19.5 percent from the April report.
What was expected was also 19.8 unemployment, so taking either the 13.3 or the 16.4 that some say is the real number, gives some satisfaction.
Then again 18 million people were jobless, and in February, 21 million people lost their jobs, a fact that gives support to the now widespread belief that it was the month that the recession began in the United States. Taking an even closer look, we have for purposes of discussion, 129,718 for February and in May, 111,732, down by 17,986.
A payoff of 2,905 jobs? Talk about the brass ring.
From all of the mainstream media reports, we have learned that many of the Labor and Census interviewers, data technicians, and their support staff, were working from home without their customary, in-office tools of support; but, in hindsight we also see that there were revisions for both March and April. But, and this is a big but, those months traditionally are subject to revision.
Another possibility is that respondents answered the questions posed incorrectly, when asked in the household survey, of 60,000, that they were not working, when in fact they might have been on jury duty
If that does not make your head spin, then sitting back for a bit and waiting on the August and September reports will give a clearer picture.
What is evident is that there were two factors, both interrelated that showed a higher number, the Payroll Protection Program, that allowed for some businesses to bring back some employees and hire more accompanied by another caveat, noted by Forbes in their online report, that some companies might not “rebound fast enough to justify all the people that are working, which could lead to a second round of layoffs.”
Putting the May numbers aside for a while, we can see, as Forbes outlined, that “26% of the roughly 18 million previously gained jobs are needed to get back to the February employment level.”
The Federal Reserve concluded its two day meeting on Wednesday, and the expectation that they would not change the interest rate, keeping it at 0.025 was met, and also that the recovery was indeed in recession, and that the road ahead would be a long and hard slog, with recovery not to be seen till 2022, at best.
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| Jerome Powell |
They will continue Quantitative Easing and the buying may help as it did in the Great Recession of 2007 and 2008, but there is some danger in the increase of overall debt, and falls in the stock market, and some are advocating for dealing with an ageing population, and understanding welfare policies, but mostly a greater increase in the handling of the COVID 19 pandemic, and its effect on the country.
“We remain confident that the overall economy will continue to improve dramatically in the third and fourth quarter,” said the Fed Chair,Jay Powell, and that was a more optimistic tone than some expected, yet giving a “doom and gloom” scenario would not have improved matters, and perception is one tenth of the law for most economic forecasters.
In that vein, small businesses will continue to need support, and some have given monies back from the Paycheck Protection Program, partly in fear that they might not be able to afford to hire back workers, and remain open for business with reduced demand and program rules.
Some lawmakers are advocating for increased direct payments, not loan, to them, but as we have seen with the U.S. House voting on another round of stimulus checks, a move that has not been welcomed by Senate majority leader, Mitch McConnell, this is an area that will require intense support.
For individuals, there is some chatter of reducing unemployment benefits on the Senate side, a move that in a presidential reelection year would prove disastrous for President Trump.
In the aftermath of the murder of George Floyd, there is much talk on Capitol Hill of creating more fiscal policy to help American blacks after decades of neglect and disinvestment in many of their communities.
Some are looking to the May report as signs of an increase, if not outright improvement for them and the figures do show that there was an increase from16.7 to 16.8, with some of the greatest gains in black youths 16 to 19 years of age from 28 percent to 34.9, but why the increase has no rationale as of yet.
In the end run, while numbers will be adjusted, there is also the realization that the 15 percent overall increase is still far below pre COVID 19 levels.
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