A better-than-expected October jobs report was immediately met with warnings that the surge in COVID-19 cases in the US could eventually force parts of the economy back into partial lockdowns.
That will apparently serve as the “fine print” on an otherwise solid report which showed the unemployment rate falling below 7%.
As ever, it’s important to look under the proverbial hood for evidence of the dreaded “scarring” effect that Jerome Powell (and other Fed officials) have consistently warned about since the onset of the pandemic. Jumping right in, long-term unemployment rose to 32.5% in October. That’s up sharply from 19.1% in September.
That figure has surged over the past two months. As Bloomberg’s Katia Dmitrieva puts it, “one-third of the unemployed haven’t had a job since the first round of coronavirus layoffs in April.”
Each month, I look at permanent job losses. Think of it as the economic equivalent of fatalities in the pandemic. It’s a macabre lagging indicator.
In October, that figure was little changed, stuck at nearly 3.7 million, up 2.4 million from February.
Needless to say, a situation that finds 2.4 million more job losses classified as “permanent” versus just eight months ago, argues for additional fiscal support.
Also notable is the rise in persons employed part time for economic reasons. October’s 383,000 increase was the first in five months.
The string of declines from May through September summed to a reduction of 4.6 million from the pandemic peak. That streak is over.
A quick look at the racial disparity shows that the African American unemployment rate remains much higher (10.8%) than the rate for white workers.
Still, the gap narrowed for a second consecutive month. That’s nice to hear.
At the same time, the participation rate for women rose, and the unemployment rate for adult women fell below that for men.
Obviously, touting these statistics is not an attempt to suggest that any one group’s jobs are more important than any other’s. Rather, the point is that with the nation arguably more divided than it’s been in decades, and with the fight for equality in the workplace now playing out against the backdrop of a pandemic, the more inclusive the labor market recovery, the more conducive to calm.
The unfortunate reality is that payrolls remain 10 million lower than they were pre-pandemic. There’s (much) more work to be done. And surging COVID cases aren’t going to make that work any easier.
“Overall it is a good outcome re-affirming the economy’s strong momentum heading into Q4,” ING said, in a quick take.
“However, with daily COVID cases rising above 100,000 there is a real threat that what is happening in Europe soon heads this side of the Atlantic,” the bank added, cautioning that “increased hospitalizations may force state Governors to take the tough decision to shut parts of the economy to try and contain the virus spread.”
