CUNA, NAFCU Economists: Expect Slow Job Recovery

NAFCU and CUNA economists were encouraged that job creation improved in May, but said the pace indicates it will take longer for the economy to recover all the jobs lost since COVID-19 was declared a pandemic in March 2020.

The U.S. Bureau of Labor Statistics reported Friday that total nonfarm employment rose by a seasonally adjusted 559,000 jobs from April to May. Notable job gains occurred in education, health care, social assistance, and the broad “leisure and hospitality” segment dominated by restaurants.

CUNA watches labor trends carefully because they are a major factor in its forecasts.

Dawit Zenebe, who joined CUNA June 1 as a senior economist, said the jobs gained in May are certainly better than April’s weak gain of 278,000 jobs, but lower than the gain of at least 600,000 expected by many economists.

Moreover, he said the economy still has 7.6 million fewer jobs than it had in February 2020.

“That’s a huge number,” Zenebe said. “We might not even hit it even by the end of 2022 at this rate.”

NAFCU Chief Economist Curt Long on Friday said the BLS report was “generally encouraging” because of the improvement in job gains in May compared with April.

“Women under age 35 saw a large share of those gains, which may indicate that childcare issues are abating,” Long said. “Overall, this report should quell fears of a major slowdown, but it also highlights that the labor market will take substantial time before a full recovery is achievable.”

The BLS also reported the unemployment rate was 5.8% in May. That’s down from 6.1% in April, but still well above its pre-pandemic rate of 3.5% in February 2020.

Zenebe said the 0.3 percentage point drop in the unemployment rate was particularly good. At the current rate, the jobless rate could fall to 5% by year’s end.

He said he expects the labor participation rate to start rising by September as vaccination rates rise, business openings increase and federal jobless benefits expire.

“We might see more job growth numbers in the future,” he said.

A BLS survey begun in March 2020 to track pandemic influences on the job market found:

• People teleworking because of the pandemic made up 16.6% of the employed in May, down from 18.3% in April.
• In May, 7.9 million people reported that they were laid off or lost hours because their employer closed or lost business due to the pandemic — down from 9.4 million in April.
• Among those not in the labor force in May, 2.5 million people were prevented from looking for work due to the pandemic — down from 2.8 million in April.