The US Recovery From The Pandemic Recession Is Slowing Down. The Employment Outlook Remains Grim. A Large Number Of Americans Haven’t  Worked For More Than A Half A Year.

“Normally, the last jobs numbers published before a presidential election are an occasion for partisans to offer their final spin on the state of the economy. The incumbent party points to whatever looks good in the data as proof that its policies are working, and the challenger identifies flaws that remain…. (The) 661,000 positions employers added to their payrolls in September are paltry relative to the 22 million positions slashed in March and April, and relative to the seven-figure monthly job growth experienced from May through August.” (NYT, Oct 2, 2020)

“Why do we need economic relief? Despite several months of large employment gains, America has only partly recovered from horrific job losses in the early months of the pandemic — and the pace of recovery has slowed to a relative crawl. All indications are that the economy will remain weak for many months, maybe even years.” (Paul Krugman, NYT, October 9, 2020)

America’s job market gains slowed markedly in September and many Americans quit looking for work, underscoring the harsh conclusion that the recovery is weakening and that the economy desperately needs fresh federal government fiscal support. Moreover, the September job figures also highlight that longer-term unemployment has become a major problem in the US.

As it is, the economy added only 661,000 new payroll jobs in September and the unemployment rate remained essentially unchanged at 7.9%. The 661,000-employment increase in September was considerably below the 1.49 million jobs recovered in August.

While in a pre-pandemic world a 661,000 monthly jobs gain would be considered miraculous, as the chart below illustrates, nonfarm employment in September was 10.7 million, or 7% below its former peak in February.

The following charts also underscore that the US economy’s recovery from the pandemic downturn has been slowing.

With respect to where the jobs that returned in September, the leisure and hospitality sector continued to recover the most in the month, primarily in the restaurant industry. The other sectors posting notable job gains in September included health care and social assistance and professional and business services, while government employment declined sharply, primarily due to steep state and local government cutbacks.

The latest jobs survey also indicates that as of September 2.4 million Americans were out of work for more than 27 weeks, or for about a half a year. It is expected that this category of long-term unemployed will increase to about five million over the next two months.

Equally alarming, in September, the number of persons who have dropped out of the labor force but who really want to work remained at a high of 7.2 million, which was 2.3 million higher than in February.

Finally, as an economist, I wish Joe Biden well as he and his Administration tackle the recovery emerging from the pandemic recession.

But even if he can push a needed longer-term and energetic fiscal response out of Congress, the US recovery will be awfully slow and sluggish.  Realistically, the massive and somewhat intractable high unemployment problem underscores that the American economy’s recovery from the pandemic recession will be unusually slow and painful.