We learned this morning that the U.S. economy added 1.8 million jobs in July. Six months ago, this level of job growth would have been cause for celebration, but today the magnitude of the gains are still swamped by the massive loss of jobs incurred this spring. The job growth this month led to a small decline in the unemployment rate to 10.2 percent, which is still higher than the worst point during the Great Recession. There are 16.3 million people who remain unemployed following the 22 million job losses that were posted in March and April.
This month’s jobs growth is also significantly lower than growth in May and June, which suggests the pace of the recovery may be slowing. The number of workers who report being on temporary layoff remains incredibly high (9.2 million)—reflecting continued closures, restrictions and related slow-downs caused by Covid—but it doesn’t come close to accounting for the sum total of unemployed workers. This suggests that the unemployment rate will remain significantly elevated even after all attached, but officially unemployed, workers have been recalled to their jobs. Finding new jobs for unemployed workers, rather than recalling them to old ones, takes time and will likely lead to a more drawn-out recovery than we had all hoped for initially.
This report should serve as a reminder to Congress that millions of Americans are facing precarious financial circumstances. Without further intervention to put more dollars into the hands of unemployed workers, we’re likely to see a massive drop in consumer expenditures in coming months which will only lead to further economic losses.
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Beth Akers is a senior fellow at the Manhattan Institute and a former Council of Economic Advisors economist. Follow her on Twitter here.