'We are still in a deep economic hole': 5 economists explain why the June jobs report is weaker than it appears
- The June jobs report, released on Thursday by the Bureau of Labor Statistics, said more jobs were added than economists had estimated.
- In addition, the unemployment rate declined more than economists expected.
- Still, economists cautioned that the report captured data from only the first half of June, before spiking coronavirus cases led states to pause or roll back reopenings.
- Here's what five economists and strategists had to say about the June jobs report and what it could mean for the recovery.
- Visit Business Insider's homepage for more stories.
The June jobs report surprised to the upside on Thursday, showing that the US added 4.8 million jobs, more than economists had expected, and that the unemployment rate declined to 11.1%.
The report showed that people were going back to work as the US slowly reopens its economy from the sweeping lockdowns many states imposed in mid-March to curb the spread of COVID-19. Jobs were added in almost every industry, with the biggest gains in leisure and hospitality, which has been hardest hit by the coronavirus pandemic.
Still, economists noted that because the pandemic has moved so fast, the jobs report is already out of date. The reference period for the report goes through June 12, so it doesn't capture the second half of the month, when many states began seeing new spikes in coronavirus cases.
In the last two weeks of the month, the surge in new cases led more than 19 states and cities to roll back or pause their reopening plans.
The US is still grappling with the worst economic downturn since the Great Depression; it officially fell into a recession in February. And economists cautioned that there's a long way to go — even with June's job gains, the US is still down about 15 million jobs since the beginning of the pandemic.
"We are still in a deep economic hole," Daniel Zhao, a senior economist at Glassdoor, told Business Insider. "Any improvement is good, but we still have a long way to go before we can return to pre-crisis levels and make up for lost economic ground."
Here's what five economists and strategists had to say about the June jobs report.
1. Glassdoor: "There's no getting around calling it a positive surprise"
"Today's report was better than expected, and I think there's no getting around calling it a positive surprise," Daniel Zhao, senior economist at Glassdoor, told Business Insider.
"In some ways today's report is looking in the rearview mirror because we're now two to three weeks removed from when the report was collecting data," Zhao said. "The through line of this crisis is that things can change on a weekly basis."
The topline numbers show "how the economy can recover after the initial effects of the public health crisis recede," said Zhao.
He also pointed to the 10.6 million people temporarily unemployed in June as both good and bad. While the unemployment rate is still high, those workers will hopefully be able to return to their jobs, he said.
2. Schmidt Futures: "It's really important to focus on where we are, not just how much we've improved"
"I was certainly pleasantly surprised by the headline number," Martha Gimbel, an economist at Schmidt Futures, told Business Insider. "The caveat is that this data was collected before the virus started surging again."
She continued: "The real lesson of today's report is that we still have the potential to add these jobs back if we can get the public health crisis under control."
Going forward, the question is "whether or not that improvement can be sustained and to whether or not it will spread to other workers as well," said Gimbel.
And, focusing on the change instead of the level is a mistake, she said. "Adding 4.8 million jobs is amazing. We are still down 15 million jobs over the course of this crisis."
"So it's really important to focus on where we are, not just how much we've improved," she said.
3. Navy Federal Credit Union: The recovery "continues to be shambolic, but overall, the country just booked a second month of multi-million job gains."
"The pace of job creation is almost certainly not going to keep up," said Nick Bunker, an economist at Indeed, in a Thursday note. "Yes, the unemployment rate might have declined, but workers are still losing jobs and signs point toward more and more of these losses becoming permanent."
He continued: "The coronavirus crisis moves so quickly that these numbers are already out of date, but the signals we can read suggest the near term future is not bright."
"The labor market was already in a bad place before the recent spikes in coronavirus cases, which could stall economic activity again. The next few weeks will be important to determine where we go next."
See the rest of the story at Business Insider
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