The Job Market is on the Mend, But It Still Has a Long Way to Go
Sources: NY Times and Federal Reserve Bank of St. Louis
The latest jobs report had a glimmer of hope that the economy may be recovering more quickly than expected, with a surprise 2.5 million increase in jobs and a decline in the unemployment rate from 14.7% to 13.3% in May. Nearly all economists expected further job losses this month based on the weekly claims data, so the increase came as a huge surprise. The Bureau of Labor Statistics (BLS) acknowledges that their data collection efforts have been impacted by the Coronavirus, noting that over 5 million people were reported as employed, even though they were not actually working. The BLS chose not to reclassify the data. Had this misclassification error not occurred, the May unemployment rate would have been 3% higher than what was reported, or 16.3%. Given the magnitude of the job losses in recent months and the data collection issues, future labor market reports will likely see huge revisions. While markets have soared on the better-than-expected jobs report, it is worth remembering that the unemployment rate is at its highest level in over 70 years and it will take a long time to recover the jobs lost in recent months.
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