The Economy Is Healing. But Not Fast Enough to Prevent Serious Damage.

Are you, by nature, an optimist or a pessimist? Either way, the Bureau of Labor Statistics has some numbers for you.That is the reality of the October employment report, which on Friday showed genuine evidence that the economy is healing from its pandemic-induced collapse last spring, but also scars suggesting that the harm it did may linger for a long time to come.To start with the happier signs: Employers added 638,000 jobs in October, and that number was held back because the Census Bureau cut 147,000 temporary positions as it wound down its once-a-decade count. If you exclude those losses, the 785,000 net jobs added represent an acceleration from the rate of job gains in September, and at that adjusted rate the economy would return to pre-pandemic levels in 13 more months.The share of Americans who say they are working rose by 0.8 of a percentage point, a sharp improvement both in terms of its level and in terms of the pace of improvement. The employment-to-population ratio rose only 0.1 of a percentage point in September.And the unemployment rate fell by a full percentage point to 6.9 percent, a steeper drop than any single month in the 71 years of employment data stretching from 1948 to 2019. (There have been three other months in the pandemic recovery this year with steeper declines.)A look at the industries that are adding jobs suggests this recovery is relatively broad-based. In particular, some of the sectors that would be expected to keep bleeding jobs if we were settling in for a protracted recession are rebounding. Construction employment rose by 84,000 in October, retail rose by 104,000, and transportation and warehousing was up by 63,000. Temporary help services employment rose by 109,000, a sign that employers need more labor even if they aren’t willing to make permanent hires yet.All that is particularly impressive when you consider that we’re now starting to feel the brunt of the expiration of federal bailout efforts. The $1,200 stimulus checks many Americans received in the spring have probably already been spent. Expanded unemployment benefits have now been unavailable for three months. There has been no re-upping of the government’s program to support small business. Yet the economy has not fallen into the abyss.So it is entirely reasonable to celebrate the progress the economy is making.If, on the other hand, you take a more dour approach, there is a lot of reason to worry about the ways the economy is still deeply broken — and about the signs that healing will not be a speedy process, especially if the coronavirus pandemic continues to worsen over the winter, as appears likely.For one, even if this rate of job creation can keep up for another 13 months, that still implies a lengthy period in which the economy is functioning far below potential. That in turn implies that many people who want to work will remain jobless for reasons out of their control. They may be out of work for long enough that they are at risk of losing their connections to the labor force and their skills, as well as the income they need to support their families.Part of what made the 2008-2009 recession so damaging was that the slow recovery left many people on the sidelines of the work force for months or years, and the risk is of a repeat of that episode.In October, for example, the number of long-term unemployed — those out of work for more than half a year — rose by 50 percent to 3.6 million, and now account for about a third of total unemployment. It is considerably more damaging to be out of work for long periods than for short periods, and that is the type of unemployment that is rising.Some of the job gains are taking place in sectors that would be highly vulnerable if rising virus caseloads caused new shutdowns. Restaurants and hotels — “accommodation and food services” in the more formal government classifications — added 226,000 positions in October, about 35 percent of total job creation.Those jobs may go away again if public health concerns cause a new retrenchment in those industries — and the latest data on coronavirus infection rates suggests that is a possibility.The deeper the hole, the harder it is to fill back in. The United States is filling in the deep economic hole caused by the pandemic. But at the rate things are going, Americans will be at risk of falling in for quite some time to come.


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