October's Real Unemployment Rate

October delivered a sixth consecutive month of huge job gains. It continues the trend we've seen as lockdowns have eased during the pandemic. 2020 has demonstrated that if we give businesses room to breathe, they’ll make the most of the opportunity. Perseverance continues to prevail. While there are more questions than answers regarding economic and pandemic policy going forward after the elections, it's hard to know where we go from here. We've had the virus become a significant headwind again as all states are dealing with a surge in cases, with many countries, including the US having the most yet right now. The lockdowns in parts of Europe certainly aren’t good for their economy or anyone else’s. 

So, how will states respond through the rest of fall and winter? Additionally, what will stimulus in congress look like after the elections? While that remains to be seen, here’s what happened with jobs most recently.

First, let's talk about the headline numbers from the jobs report. The unemployment rate improved one percent and is now 6.9%. We added 638,000 jobs and the positive revisions from previous months total 15,000 jobs. The industries with the biggest jobs recoveries include leisure and hospitality, retail, and professional and business services.

As was evidenced in the ADP private sector jobs report, there was growth across the board, including strong gains led by the hardest hit sectors during the pandemic. The Bureau of Labor Statistics undercounted previous month’s jobs numbers by 15,000 jobs. Add them into the mix and your net number is 663,000 jobs added during the month.

Now for the real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for it's actually 12.1%. That's an improvement of 0.7% over August.

Some of the key takeaways include the size and breadth of job gains to being excellent. Also, there’s continued room for optimism and the possibility of a rapid recovery for much of the economy pending political outcomes/pandemic policies. Lastly, the real unemployment rate and base rate continue to meaningfully improve simultaneously which illustrates the progress isn’t due to the expiration of unemployment benefits but rather people really going back to work.

Photo by: Getty Images

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