Who Is Unemployed

The data also show that there are and have been disproportionate unemployment impacts on different sectors of the economy and that the job recovery has also been uneven. The most recent CES industry summary data also provide some insights as to these impacts, as shown in the next table. The industry data contain much finer detail (not shown in the table), breaking down impacts in more than 150 different employment subcategories that lie behind the more aggregate data shown in the table. The two segments with the highest unemployment rates are Mining and Leisure and Hospitality. Unemployment rates in these two sectors are extremely high, and right behind them are the Construction, Retail and Wholesale Trade, and Transportation sectors. Not surprisingly, almost all subsectors of the Leisure and Hospitality sector were especially hard hit, including the Food Services, Entertainment, and Lodging subsectors. It is also the case that these sectors are ones that tend to employ more minorities than others do.

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BLS.gov Chart 02

Not only are unemployment rates unevenly distributed across job categories, but some have also lagged in job growth. Overall, job losses continued as the economy started to slowly recover in the fourth quarter. December 2020 showed job losses of 306,000, which were still heavily concentrated in Leisure and Hospitality (-498,000), Transportation and Utilities (-43,000), and Education and Health Services (-29,000). By February, as some states began to reopen their economies, job losses continued in Construction, Mining, Information Services, and Government. Other segments which have had extremely high levels of unemployment, such as Wholesale and Retail Trade, Construction, Professional and Business Services, and Leisure and Hospitality, have had, at best, only modest increases in new job creation.

So, while some forecasters are predicting a sharp recovery in 2021 with increases in inflation, attributable to both Fed accommodation and the prospects for a significant stimulus package, the job situation continues to be a huge problem; and recovery will be uneven for many sectors. This prospect highlights the problem for the FOMC as it crafts policy going forward, especially given its focus on jobs and the unemployment situation in low-income, disadvantaged communities. How will the Fed define full employment? Will it be satisfied with hitting pre-pandemic unemployment rates for African Americans and Hispanics? Or will it try to hit the pre-pandemic overall unemployment rate for these communities, in the range of 3.6–3.8%. The answers to these questions should be the focus of the Fed’s forward guidance and would help to significantly signal to the economy the future course of its policies.

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Disclaimer: The preceding was provided by Cumberland Advisors, Home Office: One Sarasota Tower, 2 N. Tamiami Trail, Suite 303, Sarasota, FL 34236; New Jersey Office: 614 Landis Ave, Vineland, NJ ...

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