The American economy in September continued its recovery from the depths it reached this spring as the COVID-19 pandemic forced large segments of it to shut down. But the pace has slowed. The number of jobs added in September was 661,000, the first time since the recovery began that this number fell below one million.
One reason for that is the pace of reopening has slowed since May and June as some state governors (mostly Democratic ones) have been reluctant to let go of controls. And teachers’ unions have been notably reluctant to reopen schools, despite the very strong evidence that children contract the virus at very low rates and transmit it at even lower rates. With children at home, many parents have been unable to return to normal work.
Unemployment dropped to 7.9 percent from 8.4 percent in August due to large gains in the leisure and hospitality industry thanks to the lifting of restrictions on indoor dining in more and more states. Bars and restaurants were responsible for almost half the total gains in employment in September. Health and business services, manufacturing, and retail sales also enjoyed large gains last month. Altogether the economy has recovered about half the jobs lost in March and April.
Layoffs in places like amusement parks (Disney recently laid off 28,000 workers) and airlines (United and American have announced layoffs totaling 32,000) will be reflected in the October jobs report, which will not be out until after the election. If Congress can find a way to pass a new relief bill in the near future, these layoffs might be modified.
The American economy, barring a major unexpected development (and since this is the year 2020, no one would be a bit surprised if there is one), will continue to improve. But with enterprises now necessarily running very tight ships, it will be some time before we return to the unprecedented heights we enjoyed before the pandemic hit. Unemployment was at a record low of 3.5 percent in February.
Estimates of 3rd quarter GDP will be out on October 29th, just before the election.