Economic Watch: U.S. economy recovering, not yet out of woods

2021-06-18 12:56

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by Matthew Rusling

WASHINGTON, June 17 (Xinhua) -- The month of May saw the United States add 559,000 jobs, as the nation emerges from the pandemic that sent the economy into a nosedive. But economists warned it could take up to a year to get back to pre-pandemic jobless numbers.

The month's jobs report from the U.S. Bureau of Labor Statistics saw unemployment drop to 5.8 percent, from the previous month's 6.1 percent. Leisure and hospitality, the industry that was slammed last year amid restrictions on businesses and Americans' reluctance to travel, led the recovery. The sector added 292,000 jobs as bars and restaurants took on more workers amid a nationwide return to normalcy.

Private and public education also added 144,000 jobs, as schools across the nation begin to start in-person learning once again.

While this is a step in the right direction, the numbers came in lower than analysts' forecasts.

"The labor market's performance...Still supports our call that the U.S. economy remains firmly on the recovery path," Sam Bullard, a senior economist at Wells Fargo Securities, told Xinhua.

However, the economy is still 7.6 million jobs below the pre-pandemic level, Bullard noted. "At May's hiring pace, (it) would take about 13 months to fully recoup (jobs lost in the pandemic).

"In short, the labor supply is bouncing back much slower than demand," Bullard said.

Brookings Institution Senior Fellow Barry Bosworth told Xinhua that because many people are waiting for child care programs to recover, there is "unlikely to be a full recovery in the labor market until the fall."

Indeed, the delay in school openings is another factor economists said is keeping Americans at home, as many parents have left work to watch over their children while they study online.

Desmond Lachman, a resident fellow at the American Enterprise Institute, told Xinhua that Friday's jobs numbers are "cause for both celebration and concern."

"We should celebrate that the U.S. economy is clearly on the mend," Lachman said, but expressed concern that widespread labor shortages will continue in the period immediately ahead.

Indeed on Thursday, the National Federation of Independent Business said in its monthly jobs report that nearly half of all U.S. small business owners reported unfilled job openings in May, up from 44 percent in April.

One problem many economists noted is the continuation of supplemental employment benefits, which Lachman argued "reduce the incentives for workers to return to work."

U.S. President Biden in March signed into law the 1.9 trillion U.S. dollar American Rescue Plan, which extends aid until September and gives individuals a 300-U.S.-dollar weekly addition to state jobless benefits.

Some states, however, such as Montana and South Carolina, have been cutting those extra benefits early, as governors there believe the funds are creating incentives for people not to go back to work.

The White House has noted that many Americans are desperately in need of enhanced unemployment benefits, after the nationwide restrictions on businesses and school closures wreaked havoc on the economy.

Biden has said Americans who turn down suitable employment will lose their unemployment benefits, although it is unclear how or whether that will be enforced.

Many analysts remain bullish on the recovery. Already, the U.S. economy grew 6.4 percent in this year's first quarter. In March, economists at swiss bank UBS raised the 2021 fourth quarter growth estimate to 7.9 percent, which is considered a high number for a mature economy such as the United States, where even half that figure is considered large.

Laverne Walters, in her 40s and in management outside Washington DC, told Xinhua she's glad to see that restaurants in her area are much busier, a sign the economy is coming back. "You can see a big difference between now and last year."

Maci Conners, a 72-year-old retired nurse in the U.S. state of New Jersey, told Xinhua it is "refreshing" that "restaurants are now open and it looks like the pandemic is over."
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