America could emerge from a pandemic, but its job recovery may not be as rosy as some economists believed. That doesn't mean everyone should freak out – at least not yet. Almost everything in business was unprecedented in the past year and many things came as a surprise.
The U.S. economy created 266,000 jobs in April, a huge failure compared to the expected 1 million jobs economists have anticipated. The unemployment rate rose slightly to 6.1 percent in April as the number of jobs added did not exceed the number of employees. The black unemployment rate rose to 9.7 percent while the white unemployment rate fell to 5.3 percent.
The news shocked many people. "This is a big mistake that is changing the way we think about recreation," tweeted Justin Wolfers, economist at the University of Michigan. Economist Nick Bunker wrote that it "could be one of the most disappointing employment numbers ever".
"Obviously this is an incredibly disappointing report," Bunker Vox said in an interview. “All the evidence from all the other data we have suggests that labor demand is quite strong, and while today's report does not indicate a massive labor shortage, it does suggest some hesitation on behalf of workers there out to take some jobs, whether it be for fear of the virus, restrictions on childcare or concerns about job instability. "
It's hard to argue that April's Bureau of Labor Statistics job report was good – let alone that March employment numbers were also revised downward, meaning the economy actually created fewer jobs than that month originally reported. But it also reinforces something that was true during the pandemic: a lot of what's going on in the economy is just going to be completely unpredictable. Many people would not have expected a real estate boom, a shortage of chicken wings or a run on wood.
"Sometimes we overcomplicate situations by thinking we should understand them thoroughly when it really takes a lot of humility when talking about unprecedented situations," said Mark Hamrick, senior economic analyst at Bankrate. "We largely want to cheer the end of the pandemic and the end of the economic downturn, so it's easy to get caught up in a tsunami of hope and optimism, but the economy has to do its own job to heal."
The American economy lost 22 million jobs in March and April 2020, and the number is still 8 million fewer than before the pandemic. While the Covid-19 vaccine is now widespread and more than half of American adults have received at least one shot, the virus is still a dangerous threat and millions more people need to be vaccinated. It feels almost inevitable that land restoration will come in seizures and beginnings – and some pieces of the puzzle may never fit together again.
"It is easy to get caught in a tsunami of hope and optimism, but the economy has to do its own job to heal."
"We don't know exactly what the economy will be like in a month, let alone 12 months. We know it will be different because it is already different," said Hamrick.
"We knew this wasn't going to be a 100-day battle, and today's job report underscores the long-term rise to recovery," Treasury Secretary Janet Yellen said at a White House press conference Friday.
It's all been strange for a year and it will probably be strange for a while
Many economists, policy experts and politicians pointed to various explanations for the April employment figures. Some people found that some parents may not be able to get back to work very quickly due to childcare issues and school closings. Others have suggested that generous unemployment insurance benefits keep people away from the workforce, although there isn't a lot of hard data on that.
There's also the simple fact that with Covid-19 still spreading, many people are nervous about going back to work in person. Anecdotally, many companies have reported having difficulty hiring, but some companies have reported success with rising wages.
"Employers who really face labor shortages will then offer wages to attract these workers, and employers whose workers are poached will raise wages to keep their employees, and so on," said Heidi Shierholz, former chief economist in the Ministry of Labor. tweeted. She also pointed out that if employers have difficulty hiring workers, they would expect them to increase the hours of existing workers, but that has not happened extremely.
"There's a lot of churn here," said Gregory Daco, chief US economist at Oxford Economics. Daco is not as worried as some other economists about the April numbers – he was expecting the possibility of what is known as an "April breather".
"I think we have to be very careful not to fall into the trap of a one-way trend where every employment figure will be 1 million plus forever," he said. "Let's not feel depressed by just one job report." He expects big profits for the summer.
The biggest gains in April were in the leisure and hospitality industries, which makes sense given the sector's harsh impact on the closing of economies and the fact that vaccinated people gradually feel more comfortable when they go on vacation and eat out. However, there have been other developments that have been more puzzling, or at least have no sure explanation.
"Maybe we should be a little worried here, but I don't think we need to radically change our view of the world as a result of this report."
For example, employment in construction has not changed even though the construction season is upon us. Employment in temporary employment services (temporary work places) as well as in couriers and messengers decreased. If temporary jobs are falling, it could be a good sign that companies may be hiring full-time workers, but there is no guarantee that they will. For courier and delivery jobs, one possible explanation could be that people order fewer deliveries when they return to restaurants, for example. But even that is only one possibility.
There is often no such thing as a linear story when it comes to what is going on in the economy, and in this case there probably isn't. A variety of explanations for what happened in April could be true. But because we live in such a politically charged environment, people tend to be selective in the narratives they accept that align with their own interests and beliefs.
Case in point: The US Chamber of Commerce used the job report to call for an end to extended unemployment insurance, which is due to end in September.
But it's worth noting that the economy was really brought to its knees last year and it will be a while before things get better. Epidemiologists have said that the return to normal has been gradual for some time. That could also apply to the economy.
"We don't want a big freakout about this month of data. Maybe we should be a little worried here, but I don't think we need to radically change our view of the world because of this report," said Bunker.
In other words, keep calm and move on.