A Reopening Economic Miracle
The U.S. added 2.5 million jobs in May, but we have a long way to go for full recovery.
We’ve long pushed for reopening the economy from the coronavirus shutdown, wondering very early on if the cure wasn’t worse than the disease. Many governors, primarily Republican, began reopening their states by the end of April and beginning of May, forging on in spite of valid warnings of a spike in COVID-19 cases and deaths. Not only have those spikes so far failed to surface, but the economy is already beginning to recover as a result — far sooner than prognosticators expected.
The May jobs report posted not the eight million jobs lost that economists predicted but a GAIN of 2.5 million jobs — by far the largest one-month increase since 1939. The headline unemployment rate fell to 13.3%, down from 14.7% in April and vastly better than the forecasted 20%. CNBC notes, “A more encompassing unemployment figure that includes discouraged workers and those holding part-time jobs for economic reasons fell to 21.2% from 22.8%, the highest in the series history.”
Obviously, we have a long way to go. Early in the shutdown, the St. Louis Federal Reserve forecasted 47 million jobs lost, which turned out to be more accurate than we hoped. Yesterday’s jobless claims were a reported 1.9 million and brought the overall total to 42 million.
And there’s still the impact of enhanced unemployment checks, which Congress is debating extending. The Washington Times reports on the Congressional Budget Office estimate: “Roughly 80% of recipients of expanded federal unemployment insurance would get more money from the benefits than they could expect to earn from a job if the emergency program is extended another six months.”
The CBO also warns that the pandemic will cost the economy nearly $8 trillion over a decade and that it will be years before we dig out of the hole.
Meanwhile, however, the stock market is … roughly where it was in early March. That’s useful as a barometer of economic confidence, as well as a specific measure of the retirement accounts of millions of Americans.
Finally, don’t discount the bad effect riots have had on the economy. The Wall Street Journal reports, “Many businesses in big cities had reopened or were set to reopen only to be looted or forced to board up during the protests. That could delay their reopening by days or weeks and cause another round of job losses.”
In short, seemingly contradictory statistics, lagging indicators, and societal unrest will require some time to sort out before we get the true economic picture. Stay tuned for possible major revisions to these numbers.
That said, we wrote just last week about how Democrats are panicking over economic recovery because it will damage their political prospects in November. That recovery seems to have begun, and Democrats must be terrified.