Is the Economy Back on Track?
The US economy added 850,000 jobs during the month of June – the largest gain in 10 months – following weaker gains of 583,000 in May and 269,000 in April.
The largest gains were reported in Leisure and Hospitality, with a full fourth of June’s new jobs coming from restaurants and bars.
“In terms of the pace of hiring, this is probably close to max speed just given how quickly workers are coming back,” says Wells Fargo economist Sarah House. “Employers are making it work.”
To attract workers, businesses are offering higher wages, increased benefits, and signing bonuses. Hourly wages for workers in the private sector are up 3.6% compared to last year; wages for hospitality workers are up 7.9%.
Other factors pushing Americans to work include:
- Relaxed pandemic restrictions on businesses
- The expiration of unemployment benefits
- Increased vaccination rate/ decreased fear of illness
Friday’s jobs report produced increases at the stock market and eased investors’ fears of economic depression. Some have already called on the Federal Reserve to slow its rapid purchasing of Treasury and mortgage securities, while others say it is too soon.
Despite the jobs increase, there are still about 7 million fewer jobs now than there were in February of 2020.
“While we have clear growth opportunities, the widespread labor shortages impacting many companies and industries across the US is also impacting us through higher wages and lower productivity, particularly in the first quarter,” complains Mike Lenz, chief financial officer for FedEx.
Unemployment remains higher than pre-pandemic levels and many able-bodied Americans continue to collect enhanced unemployment benefits rather than return to work. Others have decided to retire early.