A pedestrian wearing a face mask walks past the New York State Department of Labor office in the Brooklyn borough of New York, the United States, on May 8, 2020. (Photo by Michael Nagle/Xinhua)
"These data suggest the temporary labor market problems are very deep and that even if individuals on temporary layoff returned to work very quickly, the United States would still have a recessionary level of unemployment for some time to come," U.S. economists said in an analysis published Friday.
WASHINGTON, Aug. 8 (Xinhua) -- U.S. unemployment rate fell in July for the third straight month, indicating an improvement in a labor market ravaged by the COVID-19 pandemic. But analysts warn that uncertainties remain and recovery has a long way to go.
U.S. employers added 1.8 million jobs in July, and the unemployment rate dropped to 10.2 percent amid reopening efforts, the U.S. Bureau of Labor Statistics reported Friday.
The unemployment rate previously soared to a record 14.7 percent in April amid COVID-19 shutdowns. It declined slightly to 13.3 percent in May and then fell to 11.1 percent in June, as businesses gradually reopened across the country.
The largest employment increases in July occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care, according to the report.
"The recovery in the labor market remains intact, but the pace is slowing," Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis, adding that unemployment remains "staggeringly high."
House noted that nonfarm payrolls have yet to recover even half of the jobs lost since February. "Payrolls remain 12.9 million below pre-pandemic levels, a bigger hole than at even the worst point in the aftermath of the Great Recession," she said.
People dine outside a restaurant in New York, the United States, June 25, 2020. (Photo by Michael Nagle/Xinhua)
Peterson Institute for International Economics (PIIE) senior fellow and Harvard professor Jason Furman, and Harvard Kennedy School research associate Wilson Powell argued that the official unemployment rate continues to understate the unemployment rate from a historically comparable perspective.
In an analysis published Friday, the two experts noted that an extra 1.4 million people who were "not at work for other reasons" were counted as employed, and 4.7 million people have left the labor force since February, which means "realistic unemployment rate" was 12.0 percent in July.
Furman and Powell also noted that an additional 8.4 million of the unemployed since February reported being on temporary layoff, and if all of these people were immediately called back to work and the labor force adjusted accordingly -- a very optimistic scenario -- the "full recall unemployment rate" would still be a very elevated 7.0 percent.
"These data suggest the temporary labor market problems are very deep and that even if individuals on temporary layoff returned to work very quickly, the United States would still have a recessionary level of unemployment for some time to come," they said.
A manicurist works on a customer's hand at Sundays Nail Studio, a nail salon in Manhattan of New York City, the United States, on July 6, 2020. (Xinhua/Wang Ying)
House said it becomes clear that businesses will be contending with a pandemic economy "for some months to come," as job losses are shifting from temporary to permanent. "That brings us to a more dangerous phase of the crisis," she said.
The jobs report came one day after the Labor Department reported the number of initial jobless claims in the United States had fallen to 1.186 million last week, following an increase for two consecutive weeks amid a resurgence in COVID-19 cases.
With the latest numbers, more than 55 million initial jobless claims have been filed over the past 20 weeks, indicating a mounting economic fallout related to the pandemic.
The extra 600-U.S.-dollar weekly unemployment benefits, which helped nearly 30 million Americans, expired last week, but Republican and Democratic lawmakers remain deadlocked on the next COVID-19 relief bill.
According to economists at Wells Fargo Securities, in the absence of a new supplemental jobless benefit, aggregate U.S. household income will lose roughly 72 billion dollars a month and is likely to weigh meaningfully on consumer spending.
With the pace of re-openings slowing in recent weeks, House said further gains in the labor market will be more incremental and a full recovery is years away.
"The initial bounce from widespread re-openings is now behind us. Further improvement will occur in fits and starts and depends on the course of the virus," she said.
People wait to receive food at a food distribution site in the Brooklyn borough of New York, the United States, May 14, 2020. (Photo by Michael Nagle/Xinhua)
DOUBT ABOUT RECOVERY
Despite the decrease in unemployment, the slow job growth and further spread of COVID-19 have cast shadows on U.S. recovery pace.
The Institute for Health Metrics and Evaluation (IHME) at the University of Washington on Thursday updated their forecast that there will be 295,011 coronavirus deaths by Dec. 1, based on the current projection scenario.
In early May, the IHME forecast the United States would have 134,000 COVID-19 deaths by early August. As of Aug. 7, the country has 160,000 deaths, according to data from Johns Hopkins University.
Masks and other protective measures against transmission of the virus are essential to staying COVID-19-free, but people's inconsistent use of those measures is a serious problem, said IHME Director Dr. Christopher Murray.
"It appears that people are wearing masks and socially distancing more frequently as infections increase, then after a while as infections drop, people let their guard down and stop taking these measures to protect themselves and others … And the potentially deadly cycle starts over again."
A notice shows that the interior of the Statue of Liberty remains closed on Liberty Island in New York, the United States, July 20, 2020. (Xinhua/Wang Ying)
There are fewer transmissions of the virus in Arizona, California, Florida, and Texas, Murray noted. The drop in infections appears to be driven by the combination of local mandates for mask use, bar and restaurant closures, and more responsible behavior by the public.
However, repeated shutdowns for virus containment actually remain as "a threat to the labor market, which is already weak," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York, according to a Reuters report.
"Without effective virus containment, the recovery remains at risk from ongoing job losses that could further restrain incomes and spending," Farooqi said.
Confirmed COVID-19 cases in the United States hit over 4,937,441 and fatalities surpassed 161,200 as of Friday evening, according to Johns Hopkins University.
(Xinhua writer Tan Jingjing in Washington contributed to this story.) ■