The lagging economy shows that we need to invest more, not less, in the Build Back Better agenda.

[bluewater]

3. The economy is still trying to recover from the pandemic

Last edited Fri Oct 8, 2021, 02:11 PM - Edit history (2)

Here's what the Brookings Institute says on the matter:

The economic downturn caused by the pandemic has created widely different experiences across sectors and demographic groups. In the spring of 2020, spending on consumer services sharply contracted and has yet to fully recover. Indeed, of the 22 million total jobs lost in March 2020, nearly 19 million were in service-providing businesses, including a decline of 8 million in leisure and hospitality. Leisure and hospitality has added back more than 6.5 million jobs so far; as a result, it is still 10 percent short of returning to its pre-pandemic level, and even farther below its expected level in the absence of the pandemic. Other industries, such as financial services, that experienced shallower dips in employment during the onset of the pandemic, have also been the quickest to recover as their workforces were better able to shift to remote work.

Those sector dynamics disproportionately hurt women, non-white workers, lower-wage earners, and those with less education (Stevenson 2020). Because workers among those groups were more likely to be employed in the services sector, and in particular in the leisure and hospitality sector, they experienced job losses at much higher rates. For example, the gap in the rates of unemployment between Black and white men jumped from 3 percentage points to 6 percentage points during the initial downturn. By July, that gap had partially fallen back and was 4 percentage points.

The uneven recovery is also evident when we focus on consumer spending at retail establishments. Between February and April 2020, overall retail sales sank 22 percent before quickly recovering to their pre-pandemic level just a few months later. As people began social distancing, spending shifted to at-home consumption, benefiting businesses like online retailers, grocery stores, and suppliers of building and garden materials. Indeed, spending on total retail sales has averaged 16 percent higher than its pre-pandemic level so far this year. At the same time, some categories of retail sales were severely depressed until showing signs of recovery in March of this year; those include in-person dining and spending on clothes, electronics, and appliances.

Overall, the pandemic continues to weigh on aggregate demand for goods and services. In addition, bottlenecks and supply shortages have created challenges for businesses to meet consumer demand for some products, particularly as consumer demand has shifted wildly. Also, the pace of hiring has not kept up with the pace of labor demand, as job matching has been held back by a number of factors described below.

Fact 2: The sharp decline in employment in spring 2020, which was largely concentrated in the services sector, has only partially reversed.
Figure 2 shows the percent difference in overall employment from the peak month prior to recent economic downturns through the month where employment recovered to its previous business cycle peak. Across the labor market, employment is still down 5.3 million from February 2020 and down about 9 million from where trends in employment were headed to prior to the pandemic.

From February to April of 2020, employment declines in the leisure and hospitality sector accounted for about 40 percent of the total 22 million jobs that were lost. Conversely, a partial recovery in that sector has fueled employment growth since then. Overall, from February through July of this year, monthly employment rose by more than 700,000 on average. In August that pace slowed significantly, however. The resurgence of the pandemic likely held back the recovery in the leisure and hospitality sector, which saw no net gain in employment in August. In that sector, employment is still down 1.7 million jobs from February 2020.

Fact 3: Millions of workers are no longer eligible for Unemployment Insurance.
Over the summer of 2021 in some states, and in the first week of September 2021 in the remainder of states, enhanced UI expired. That set of policies had significantly expanded eligibility to workers not covered by regular UI (Pandemic Unemployment Assistance [PUA]), extended the number of weeks that a worker could receive UI (Pandemic Emergency Unemployment Compensation [PEUC]), and increased the generosity of benefits (Federal Pandemic Unemployment Compensation [FPUC]). Prior to the CARES Act, which created PUA, PEUC, and FPUC, only 30 percent of workers were eligible for unemployment compensation.

Figure 3 shows the total number of unemployed workers superimposed over weekly continued UI claims for regular UI benefits and Extended Benefits, which automatically extends weeks of eligibility based on a state’s economic conditions, as well as claims for emergency programs: PUA and PEUC.

Note that the level of unemployment greatly underestimates the number of people who lost jobs during the pandemic. To be described as officially unemployed, a person must be actively looking for work; however, millions of people effectively have left the labor force since March 2020 but were eligible for the expanded UI benefits. At the time that the emergency programs expired, there was a gap of more than 5.5 million workers who were in the labor market and unemployed, but not receiving UI. We project that gap to close only modestly through the end of this year.

https://www.brookings.edu/research/11-facts-on-the-economic-recovery-from-the-covid-19-pandemic/

Also, note that when you pointed out this:

The economy has added more jobs this year than any other year on record. It's growing at close to 7% annually too.

it failed to mention that this "record" was due to climbing out of the huge crater created by the layoffs during the pandemic. As the economy recovered and approached/reached (depending on the economist) pre-pandemic levels, economic recovery has been uneven, as demonstrated by the latest job numbers being lower than expected both in August and September.

The Jobs reports were also lower than expected in April and May.

In fairness, the June and July numbers exceeded expectations, but were followed by disappointing August and September numbers, demonstrating the uneven nature of the recovery.

Weak jobs report shows the need for massive jobs and families bills, Biden says

https://www.cnbc.com/2021/05/07/weak-jobs-report-shows-the-need-for-massive-jobs-and-families-bills-biden-says.html

May jobs report lower than expected

https://www.cuinsight.com/may-jobs-report-lower-than-expected.html

Another important thing to note, the recovery has been fueled by governmental stimulus money, and now that's going away:

“People will be surprised at how much the economy decelerates over the next year as the stimulus boost fades,” said Jim O’Sullivan, the chief U.S. macrostrategist for TD Securities.


All the more reason to invest more in president Biden's Build Back Better agenda now.