The United States economy showed more signs of recovery in September, as the Labor Department’s jobs report revealed that 661,000 jobs were added last month, dropping the unemployment rate to 7.9% from 8.4%.
September marked the fifth straight month of net job gains and the unemployment rate dropped below 8%, after peaking at 19.2% in April at the height of the pandemic. The job gains, however, have slowed since June, when 5 million jobs were added. There were 1.7 million jobs added in July and 1.4 million added in August. What dragged down employment in September was a decline in public-education jobs at local schools and state colleges, most of which have adopted online learning, according to MarketWatch.
The positive figures from Friday’s jobs report came with a couple caveats. First, the unemployment decline partly reflected an increase in hiring, but 700,000 people exited the labor force and stopped looking for work because jobs were scarce. They aren’t counted in the unemployment rate. Additionally, several prominent companies such as Disney and Allstate recently announced large job cuts. The airline industry is also reeling after Congress failed to pass a last-minute deal to extend coronavirus relief aid. American Airlines and United Airlines both confirmed they would have to layoff significant portions of their workforce as a result. In total, about 50,000 jobs are expected to be lost in the industry in October, according to NBC News.
“It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” Diane Swonk, chief economist for the accounting firm Grant Thornton told the New York Times. “This is a red flag. We need aid now.”
Despite those concerns, the recovery does appear to be well ahead of economists’ forecasts in the spring. It has regained more than half of the roughly 22 million jobs that were lost in March and April. Many of those gains were the result of businesses reopening and bringing back workers. Now, a growing number of businesses are deciding to make permanent job cuts, or to shut down. The number of people reporting they had lost their jobs permanently, as opposed to being on temporary furlough, rose in September.
Some economists believe that an increase in permanent job losses will become a stark reality if Congress doesn’t provide more aid to households and businesses to replace the relief programs that expired over the summer. Yet other economists contend the economy will continue to expand as workers, consumers and businesses find ways to cope with the virus and governments loosen restrictions.
“This underscores that job gains from here on will be tougher,” Robert Frick, corporate economist at Navy Federal Credit Union, told MarketWatch, “and speaks to the need for more stimulus to help the economy and to support the more than 11 million Americans who had jobs in February and who are unemployed now.”
About the Author
Brett Christie is the managing editor of Workspan Daily.