US Economy Regains 1.8m Jobs In July

A woman rides past the New York Stock Exchange (NYSE) on July 13, 2020 at Wall Street in New York City. Johannes EISELE / AFP

The US economy regained 1.8 million jobs in July, a solid but unremarkable result that comes as President Donald Trump prepares for a difficult re-election bid, but economists warn challenges to the pandemic recovery are growing.

As COVID-19 cases spiked in several states in recent weeks, new restrictions to contain the virus forced some businesses to shut their doors again, while many have already closed permanently, raising concerns the labor market could take a turn for the worse.

Trump’s economic team has also not been able to narrow the gap with Democratic leaders in Congress over a new emergency spending bill to renew aid that has supported consumer spending in the past three months.

The unemployment rate fell to 10.2 percent last month from 11.1 percent in June, according to the critical government report, still slightly worse than the nadir of the global financial crisis in October 2009.

However, the Labor Department said some workers continue to be misclassified in the survey. Without that, the jobless rate would have been a full point higher than reported.

“Great Jobs Numbers!” Trump tweeted

And though White House economic advisor Larry Kudlow continues to express confidence in a rapid “V-shaped recovery,” most economists say it will take until next year to return employment to pre-pandemic levels, and only in the unlikely case of the July pace being sustained.

The July employment gain marked a sharp slowdown from the increases of 4.8 million in June and 2.7 million in May, and means less than half the 22 million payroll jobs lost during the pandemic have been regained.

“This is far from normal, as another 13 million jobs are needed just to get us back to pre-pandemic employment levels,” said Lawrence Yun, chief economist of the National Association of Realtors, who noted virus cases are rising faster in states that reopened, “Illustrating the tough tradeoffs in the decision between livelihood versus lives.”

‘Slow and prolonged’

Trump’s Democratic challenger Joe Biden seized on the high numbers of jobless shown in the report to attack the president.

“While I am grateful for the people who got their jobs back, my heart goes out to the more than 16 million Americans still out of work. The truth is it didn’t have to be this bad, but Donald Trump failed to act,” Biden tweeted.

A third of private jobs gains were due to bars and restaurants reopening, according to the report.

Government and healthcare also saw strong hiring, but public jobs like teachers may have been inflated by the fact many were laid off earlier than usual because of the school closures in March. And with many schools hesitant to reopen, those jobs could greatly decrease in August.

There are just two more reports before the November elections, leaving little time for Trump to show the kind of improvement that will cement his bid for a second term in the White House.

“Recovery in jobs to pre-pandemic levels will likely be slow and prolonged, one that will restrain the pace of recovery,” Rubeela Farooqi of High Frequency Economics said in an analysis of the data.

The number of people on temporary layoff in July decreased by 1.3 million, but there were nearly three million workers who lost their jobs permanently, according to the latest data.

Meanwhile, 8.4 million people were working part-time not by choice but out of necessity, a group known as involuntary part-time workers.

After days of intense negotiations, the White House and Democratic leaders remain far apart on a new spending plan, and the administration is steadfastly refusing to agree to provide further aid to state and local governments.

Another key source of contention is the $600 in additional weekly federal payments to the unemployed, which expired at the end of July. Republicans claim the money offers an incentive for workers to stay home rather than return to their jobs, but economists say research disproves that.

Democratic House Speaker Nancy Pelosi and Senator Chuck Schumer said the boost the CARES aid package approved in late March is “losing steam and more investments are still urgently needed to protect the lives and livelihoods of the American people.”

“Millions of Americans are still hurting and yet, despite this reality, President Trump and Republicans appear ready to walk away from the negotiating table to do unworkable, weak and narrow executive orders that barely scratch the surface of what is needed to defeat the virus and help struggling Americans,” they said in a statement.

Kudlow said Trump’s team already has drafted an order for a temporary payroll tax cut — but that would only help people still working and receiving paychecks.

AFP