After a huge surge in nonfarm jobs for July economists, lawmakers and government officials were looking forward to even higher numbers for August, yet on Friday the US Labor Dept. released news that dashed all hopes with the dismal figure of 235,000 jobs, that most have attributed to the Delta Variant and its huge push into the economic behavior of Americans, just as they were going back to a relative version of normal, and especially going to restaurants, bars and other entertainment venues.
Leading the pack was Diane Swonk, chief economist at Grant Thornton who told The New York Times, “Delta is a game changer, '' and “it’s not that people are laying off workers in reaction to Delta but people are pulling back on travel and tourism and going out to eat and that has consequences.”
While there is still some activity in these areas, many people are reconsidering plans, and especially those that have children under 12 in their homes, for fear of exposure; and, with the last blush of summer fading, and a return to in person learning, pulling back, as Swonk says, is a sea change in consumer behavior, the driver of the US economy.
While most acknowledge that there is still some resilience in the American economy, no one is taking the future for granted, especially with large parts of the country unvaccinated.
“Still, this marked an eighth consecutive month of net job growth, and brought total employment closer to pre-pandemic levels,” reported Yahoo Finance, and as President Biden later noted.
Reflected in the numbers are high contact employees, especially in low wage industries that require face to face interactions, such as restaurants and bars. This creates a chilling effect on these businesses, as many have attempted to climb from the hole that the Alpha variant created. And, the Times reported that the reservation system Open Table, after a resurgence in the summer, “are now 10 percent below where they were before the pandemic.”
Shopping, a sport for many, took a decline with retail by 29,000, and the number of people working at home also took an increase, but with the report being created in mid month, online shopping figures are not available.
Hits taken by Hurricanes Henri and Ida, are also not reflected.
The good news is that most economists believe that despite all, “in the current quarter from the annualized rate of 6.5 percent in the spring, the economy is expected to remain in expansion mode for the rest of the year.”
The Delta variant is the sword of Damocles hovering over US economics and with the dearth of vaccinations, especially in the South, fragility is the watchword as Carl Tannenbaum, chief economist at Northern Trust, said in his interview, “We get another reminder of how significant the pandemic is in determining progress in our economy.”
Predictably, the Biden administration already burdened by the pullout from Afghanistan and the hurricanes, also took a punch in the gut over the news, as they try to pass legislation to increase jobs and expand infrastructure to include social capital, both in abeyance with this report.
The White House released a transcript of the president’s reaction to the news and it was clear that he was trying to put the best face on it, when he noted, “But despite the impact of the Delta variant — and I’ll talk a little more about that in a minute — what we’re seeing is an economic recovery that is durable and strong.”
Taking a long view, he noted, “The Biden plan is working. We’re getting results. America is on the move again. And today’s revision of previous month job gains, with the revision of the July numbers — this report means that we have been adding an average of 750,000 jobs per month, on average, during the past three months.
While I know some wanted to see a larger number today, and so did I, what we’ve seen this year is a continued growth, month after month, in job creation. It’s not just that I’ve added more jobs than any first-year President — in the first year of any President — it’s that we’ve added jobs in every single one of my first seven job reports. And wages are going up.”
In a year over year analysis, wages did increase to 4.3 percent.
Labor also gives a dual note when they say:
“Average hourly earnings for all employees on private nonfarm payrolls rose by 17 cents to $30.73 in August, . . . and “average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $25.99.”
Taking wages on the whole proves problematic, since ”The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages. However, because average hourly earnings vary widely across industries, the large employment fluctuations since February 2020 complicate the analysis of recent trends in average hourly earnings.”
One significance of the report is that Labor Force Participation stayed the same at 61.7 percent in August, a bellwether, say some of next month when schools across the country will be in person, and parents and caregivers are expected to return to offices, if not the service industry.
Another boon is that the long term unemployment population, those that have been jobless for 27 weeks or longer dropped from 3.4 million to about 3.2 million, noted The Hill.
While unemployment for whites fell from 4.8 percent to 4.5 percent, even while LFP stayed the same, Black workers faced an increase in unemployment from 8.2 percent to 8.8, with 0.8 in their participation, which some attribute to an earlier bump in service jobs, but might drop in the September report.
Hispanics faced a drop from 6.6 to 6.4, but Asians dropped from 5.3 percent to 4.6 percent, which reports say might be attributable to a decline in LFP, by 0.4 points.
Gains were seen in professional and business services at 74,000, but this is a catchall category that can mean anything from office temps to copier services, and everything in between.
Transportation and warehousing also made gains, thanks to all of that online ordering at 53,000, manufacturing, despite supply chain bottlenecks, came in at 73,000, and those attendant couriers, messengers and warehouse personnel came in at a strong 20,000.
Finally, it should be noted that while 5.3 million jobs were recovered since the onset of the pandemic, and using February 2020, as a baseline; but, in contrast there were 5.3 million fewer jobs in August, than in February of 2020.
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