US job growth curve essentially flattened as the country continues to grapple with how to handle the pandemic.
Jobs were added, and the BLS reports that the technical rate dropped from 11.1% in June to 10.2% in July, but the pace slowed considerably, and even the 10.2% rate is being challenged amidst reports that people are misclassifying themselves as "employed but absent from work". Nonfarm payroll had hit a record in June, but added far less than half that number for July. Over 31.3 million people were receiving unemployment checks in July.
Here's how the growth has looked, month over month:
The question on misclassifying is a vexing one. The BLS survey has a number of ways respondents can describe their current work situation. There are two that people tend to confuse: “on temporary layoff” and “absent from work due to other reasons”. The first one counts towards the unemployment number - and it's the one people on furlough should choose. The second one does not count in the unemployment category. The percentage of people who will have to consider whether or not to categorize themselves one of those two ways during the BLS survey is typically on the smaller side, and if people misclassify, the data set is so large that these mistakes get smoothed out and don't impact the integrity of the report. The issue we are facing is, as many things in 2020 are: unique. The volume of people on furlough, unpaid leave, whatever you may call it, is a large one. So much so that it impacts the date if enough of them misclassify. And they are. The BLS has seen a large spike in people choosing "absent from work for other reasons". We are still crunching the July numbers, but the trend is consistent. The gap looks to be narrowing - which makes sense, as furloughed workers in sectors such as hotels and restaurants are recalled to work (see our interview with MGM Resorts Randy Goldberg as an example of what is happening there).
During July, the country saw outbreaks flare up in various regions across the country. The one notable exception was the northeast, which is still recovering from flareups earlier in the month that devastated places like New York City. These outbreaks led many states and cities to close restaurants, bars, and other businesses. Consumers began to avoid large gatherings and retail, which may lead to a spike in furloughed and laid off workers as the summer progresses. Airlines continue to report problems, with Delta Airlines reporting that expects its third-quarter revenue and flight capacity to be around 20% to 25% of last summer, with demand stalling amid a surge in COVID-19 cases and a sustainable industry recovery more than two years away.
Continued uncertainty about the school year continues to way on the economy as well, with many parents potentially not able to return to the office due to child-care complications. Added to this daily reports of schools reopening in regions of the country, and immediately being forced to shut down as outbreaks flare up among students and staff.
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