While many seemed shocked by Friday’s jobs report, which showed a significantly healthier economy than almost all had feared, it shouldn’t have come as much of a surprise. At least after Wednesday morning. After digging into the ADP private-sector jobs report last Wednesday, I shared with you the likelihood that 11 to 17 million more people were working than had been estimated by economists. While we knew how many people had filed for unemployment based on the weekly unemployment filings, we were unaware of how many people who’d already filed had gone back to work as states began to reopen. The answer turned out to be over ten million. And with that dynamic in hand, we backed up the worst month for job loss in American history, with the best month for job gains in American history. We also see the potential for a V-shaped recovery after all. It’s not a given but now appears to be at least as likely as a long drawn out recovery which could take years.
Let’s get started on the real unemployment rate based on info in Friday’s jobs report. The unemployment rate is 13.3%, improvement of 1.4%. We added 2.5 million jobs and the negative revisions from previous months total 642,000 jobs. The industries for biggest jobs recoveries were Leisure and Hospitality, Construction and Education and Healthcare.
It’s not a surprise to see the sector most hurt by shutdowns, leisure and hospitality, to have the sharpest rebound with reopenings. What is encouraging is the resumption of construction jobs. During the Great Recession, many construction projects were simply abandoned in the process when the bottom fell out of the economy. That’s clearly not happening here. No industry is more of a leading indicator for the US economy than construction. For it to have the second sharpest recovery is huge.
Now for the real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for, it's actually 21.2% up from 7.2% year over year.
Some of the key takeaways include room for optimism and the possibility of a rapid recovery for much of the economy, the bottom of the recession appears to already be behind us and those unaccounted for in the base unemployment rate include 14.2 million Americans who are among the long-term unemployed, underemployed and marginally attached to the workforce.