| While the May Jobs Situation report appeared to reveal a huge improvement over April’s 20,000 job loss, it also came with more asterisks than a “Free Offer” on TV.
The official report from the Bureau of Labor Statistics (BLS) said there were 2.5 million jobs added in May, a record-setting increase, and a surprise to everyone. The consensus estimate was an 8 million job cut. The bottom line was that an unemployment rate which had been expected to soar to near 20%, fell by more than a point instead, to 13.3%.
But the numbers weren’t entirely correct. BLS, which has a sterling reputation for accuracy and transparency, was victim of a near perfect storm. One might almost think it was a pandemic one. The speed and severity of the economic collapse, the partial reopening of businesses in several states, Payroll Protection Program loans which made the status of some workers murky, extended unemployment benefits, and the failure of many state systems to keep up with those claims meant–as BLS readily admitted–many jobs were misclassified. In a note within the report, the agency estimated that the unemployment rate was probably more like 16.4%.
Hey, that’s still better than expected. And maybe as good as it will get, at least in the short term.
It’s Officially Called a Recession Now
The National Bureau of Economic Research, the designated arbiter of such things, officially declared the current downturn a recession, and implied we may have been there since March. “The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession,” the agency said.
And the Federal Reserve sees little reason to disagree. Its Open Market Committee (FOMC) ended its monthly two-day meeting Wednesday on a grim note, predicting a long slog to recovery. Unemployment is expected to end the year at 9.3% and remain elevated at 5.5% at least until 2022.
Fed Chair Jerome H. Powell said, “Many millions have lost their jobs,” and the extent of the downturn and pace of the recovery remain “extraordinarily uncertain.” The Fed also expects growth to contract 6.5% this year, then rebound by 5% next year.
Powell said the Fed would do whatever needs to be done to protect the economy, including continuing to purchase Treasury notes and mortgage-backed securities as needed. It will also keep its Fed Funds Rate where it is, near zero, likely through 2022.
Rates are still historically low, so if you’re considering buying, selling, or refinancing, shoot us an email or call. |
