A Rebound in Employment?
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This past week has shown some life in the American labor market. The unemployment rate fell to 13.3% from the previous April rate of 14.7% (the highest it has been since World War II). Initial jobless claims, the number of Americans filing for unemployment benefits, eased off a bit to 1.88 million this week – the lowest it has been since COVID brought America’s labor market to its knees. People finding work at restaurants and bars made up more than half of the overall job gain at 1.4 million, due to infection rates slowing and state governments lifting shutdown orders. Other significant sectors include health-care, construction, and retail. The US trade deficit has widened to $49.4 billion in April from $42.3 billion in March. This is due to exports plunging 20.5% from large sectors such as travel, passenger cars, industrial machinery, and oil.
This clearly has given people hope as shown in the S&P 500 and the DOW both rising around 3%. People must take caution, however, as economists are unclear whether this is truly a rebound or just reflective of the bare minimum amount of people needed to reopen the economy. Economic data does not show how many of these jobs are “new” or how many of them are people being called back to new jobs. Federal government aid is also expected to slow now as they have already pumped in trillions of dollars through stimulus packages. Programs put in place to help businesses and households will begin to run out this summer.
With riots and protests over the death of George Floyd spreading across the country, many businesses have had to hunker down and close again. Racial tensions are at a high as Black Lives Matter movements sweep across the nation. Several disturbing videos have even shown up online of Asian Americans being attacked.
Asian Americans are currently sitting in the middle of the pack in terms of unemployment at 15%. This is in comparison to Caucasians at 12.4%, African Americans at 16.8%, and Latinos at 17.6%. While what can be gathered from economic data is promising, there are still many issues to come. Markets are currently sailing in uncharted waters and the future of the economy is still unknown.
