The American economy defied forecasts for a Depression-style surge in Unemployment this week, signaling the economy is picking up faster than anticipated from the coronavirus-inflicted recession amid reopenings and government stimulus. A broad gauge of payrolls rose by 2.5 million in May, trouncing forecasts for a sharp decline following a 20.7 million decrease during the prior month that was the largest in records back to 1939, according to Labor Department data released on June 5. The figures were so astonishing that President Donald Trump held a news conference, where he called the numbers “outstanding” and predicted further improvement before he is up for re-election in November. While the overall picture improved, there remain several underlying issues facing the economy. For example, 21 million Americans remain unemployed with a jobless rate higher than any other time since 1939, indicating a full recovery remains far off with many likely to suffer for some time. And the return to work is uneven, with unemployment ticking up among African Americans to 16.8%, matching the highest since 1984, even as unemployment rates declined among white and Hispanic Americans. That comes amid nationwide protests over police mistreatment of African-Americans, which have drawn renewed attention to race-based inequality.
The latest figures may give a boost to President Donald Trump, who has siginficantly fallen behind Democratic challenger Joe Biden in polls amid dissatisfaction with his response to the pandemic and the death of George Floyd. The numbers could also reduce pressure on policy for another round of fiscal support, with Democrats and Republicans at odds over the timing and scope of new measures following record aid approved by Congress. “The only thing that can stop us is bad policy, like raising taxes and the Green New Deal,” President Trump said on June 5. He also said that he will ask Congress to pass more economic stimulus, including a payroll tax cut.
One caution noted by the US Labor Department is that the unemployment rate “would have been about 3 percentage points higher than reported,” so 16.3% if data were reported correctly, according to the agency’s statement. That refers to workers who were recorded as employed but absent from work due to other reasons, rather than unemployed on temporary layoff. The broader U-6, or underemployment rate, which includes those who have not searched for a job recently or want full-time employment, fell only slightly to 21.2% in May from 22.8%, which is its highest rate since 1982. In February, it was 7%, with the main unemployment rate at a half-century low of 3.5%.