The US economy added more jobs than expected in June, a welcome development to be sure.
The 850,000 headline NFP print will help allay concerns that distortions are so pervasive as to make recovering all the jobs lost to the pandemic impossible in the near- to medium-term. (And I’ll leave aside the perverse notion that such an outcome would be “good” news for markets to the extent it would give the Fed plausible deniability to keep pushing liftoff further into the future.)
Despite ongoing improvement, there are still 6.8 million workers unaccounted for. Even after adding ~1 million jobs in three months, leisure and hospitality is still in a deep hole (figure below).
Many remain focused on the food and beverage industry, for obvious reasons. Of the 343,000 jobs added in leisure and hospitality last month, 194,000 of them were in food services and drinking places.
As regular readers are apprised, I have a special place in my heart for restaurants and bars, which leads me to spend an inordinate amount of time focusing on trends in the space. The onset of the pandemic forced every economist and would-be macro maven to become similarly obsessed.
With June’s gains, employment in food services and drinking places is still around 1.3 million short of pre-pandemic levels (figure below).
The near 400,000 positions re-lost during November and December (when the US suffered a vicious winter COVID wave), were a significant setback. The psychological impact of that whipsaw is impossible to measure.
Effectively, 10% of the restaurant and bar workers re-hired following the initial lockdowns were let go again during that episode (red in the figure, above). One certainly imagines many of them were inclined to give up on returning to jobs in food service.
In any case, looking further into the June report, the number of long-term unemployed jumped more than 230,000, partially offsetting May’s decline. As a percentage of total unemployed, the long-term jobless account for 42% (figure below).
Relatedly (i.e., from the “permanent precarity” files), the number of job losers classified as “permanent” was largely unchanged in June. The figure is hovering near 3.2 million, almost two million higher than it was in February of last year. (As an aside, I’d gently suggest the BLS consider a less stigmatizing label for that category than “permanent losers.”)
The African American unemployment rate moved higher (to 9.2%), as did the rate for white Americans (to 5.2%). Bloomberg noted the obvious: “If Fed officials are serious about wanting to see [African American unemployment] come down significantly — and not just looking at the headline unemployment rate — before declaring victory on the jobs front, this signals a long way to go yet.”
Ultimately, there’s “a long way to go yet” on pretty much every front in the labor market. If the Fed wants to focus on “jobs, jobs, jobs” while relegating inflation to the back-burner, they’ve plenty of scope to do so.
Oh, and for comedic value, here’s what Bloomberg wrote on their real-time “liveblog” coverage just as the numbers hit on Friday morning: “Here Are the Numbers! (8:30 a.m. NY)”
(!!!!!!!!!!!!!!!!!!!!!!)
