The May 2020 jobs report produced promising data, defying predictions and serving as a glimmer of hope for an accelerated recovery. The job market had an unexpected revival, bringing 2.5 million workers back to the hardest-hit industries.

Wall Street rallied behind the victory, but the Federal Reserve kept recovery expectations low. The unprecedented report encouraged politicians and researchers; however, the improvement shows a resumption in economic activity and restored confidence in sectors that nearly lost hope.

“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the U.S. Bureau of Labor Statistics reported in a press release on June 5.

The U.S. Bureau of Labor Statistics was transparent about misclassifications that came from the job reports over the past three months. Despite the flaws that occurred in the claim counting system, there was an improvement in crucial sectors. The unemployment rate dropped from 14.7% in April to 13.3% in May, showing crucial improvement to keep the economy running in the months of recovery. Increases occurred primarily in leisure and hospitality, construction, education, health service and retail. Government employment numbers declined sharply for May, and 21 million remain unemployed. As more states lift restrictions to contain the coronavirus, more are returning to work in some capacity.

Federal and state rescue efforts pushed many businesses through months of closure, but some did not survive. While furloughs and temporary unemployment decreased, permanent unemployment increased.

The Federal Reserve met for their two-day policy meeting and released their projections of the coming months. In a news conference following the meeting, Chair of the Federal Reserve Jerome H. Powell affirmed that they are prepared to aid the pandemic-induced recession throughout 2022, keeping interest rates near zero for the foreseeable future. The Fed has made pessimistic predictions on the future with an emphasis on monetary and fiscal policy “must stand ready” to ensure that the economic damage is not permanent.

The sobering outlook that speculators provide counters those hoping for a V-shaped recovery. The coronavirus’ unpredictability has left experts hesitant to make distinct predictions; however, it is evident that improvement has been made. Relative to the peak months of the coronavirus closures, consumer spending rebounded, unemployment rates escaped the predicted increase to 20%, and millions are returning to work to some degree. Even though logistics undermine the claim count system, May’s employment statistics serve as an improvement from April’s, the worst job report since the Great Depression.

The shocking surge was enough to rally the markets and encourage Washington on Thursday, June 4. The Dow Jones Industrial Average roared 800 points, and NASDAQ returned to its record levels, gaining 2% after the surprise surge in employment numbers. Averages fluctuate as COVID-19 cases rise in some regions of the country, worrying investors about a second wave.

Positive health news has been the only sustainable backing for any small strides in the economy. Virus protection measures allowed the country to reopen and add back millions of jobs, but until there is a degree of certainty, Wall Street is betting on key reports that show a potential strong second quarter.

“It’s a very good jobs report all around,” said Glenn Hubbard, the former chief economist under President George W. Bush. “But the caution is there’s so much more to go from here.”

U.S. Labor Market in Recovery: 2.5 million Return to Work in May

MARIST CIRCLE