It seems that the long climb back up from the pandemic-induced depression has begun and sooner than expected.
In May, nonfarm employment rose by 2.5 million, while unemployment declined to 13.3 percent from April’s staggering 14.7 percent–the highest rate of unemployment since the Great Depression. The labor force participation rate rose 0.6 percent to 60.8 percent, having declined by 2.5 percentage points in April.
This was far better than many economists had predicted. Some economists had predicted that unemployment might reach 19.8 percent in May, with 8 million more lost jobs.
The biggest job gains were in leisure and hospitality (i.e. bars and restaurants), which added 1.2 million jobs in May, having lost 7.5 million in April and 743,000 in March. Construction was another bright spot, with a rise of 424,000 jobs, nearly half of what that sector had lost in April. Manufacturing jobs also rose by 225,000 against an April decline of 1.3 million.
The worst of the pandemic is now clearly behind us (New York City, ground zero for the disease, had no COVID-19 deaths yesterday, the first day without one since March 7). The surprisingly resilient American economy will continue to open back up and the numbers will continue to improve.
The stock market, a classic economic leading indicator, had already risen sharply since its 38 percent decline on the Dow in late February and early March. That decline had ended the longest bull market in Wall Street history. But it was followed by the shortest bear market in Wall Street history, for, in the last two months, the Dow has risen 44 percent from its low.
Wall Street is famous for having predicted 10 of the last 5 recessions. But its track record on the upside is far better.