|The economic recovery is continuing to show solid progress since the COVID19 pandemic started. Let’s take a look at the latest improvements and economic news!
This past Friday, the Bureau of Labor Statistics reported the unemployment rate fell to 8.4% in August from 10.2% in July. In August, US employers added 1.4 million jobs. While this is better than the 9%+ unemployment rate expected, we’re starting to see a slow down in job gains. However, the US economy is still down 11.5 million jobs since February 2020. For context, the unemployment rate in February 2020 was 3.5% so we still have a ways to go. Lastly, we are watching the next unemployment report in October very carefully. While we remain optimistic, it is worth noting that 17% of job gains in August were driven by 238,000 temporary 2020 Census workers. Here is an easy way to visualize the jobs recovery:
Back To Normal Index
Moody’s Analytics and CNN Business have created a new Back to Normal Index that shows how different parts of the US economy are recovering. As of yesterday, the economy is currently operating at 79% of where it was in early March 2020. We’re taking this as a win.
Low Rates For Longer
We’ve been near or at 0% interest rates since 2008. This past Friday, Jerome Powell, the Federal Reserve Chair, stated “we think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time. It will be measured in years.” Low interest rates help support the economy by reducing the costs of borrowing. Powell believes that it will take years for the economy to recover to 2019 levels. We agree.
Bottom Line: Progress Is Progress
Fortunately, the worst projections for the economy have not come to fruition. While we are in a deep recession, we are not in an economic depression and stimulus/various forbearance policies has helped countless American stay on their feet. We are seeing many business find a way to survive in this environment, and we’re adjusting, as a country, to our new reality so we can support the economy while keeping COVID19 cases down. For now, the economic recovery continues!