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The U.S. economy created 266,000 jobs in April, a major failure compared to expectations that the rapid deployment of U.S. vaccination and fiscal stimulus measures would generate employment gains close to the ‘1 million.
The implication for the recovery is that the U.S. boom coming out of the winter rise in coronavirus cases is not as strong as previously thought. The officer data released Friday validate the Federal Reserve’s sustained view that the U.S. recovery is far from complete and will be bound to alleviate some fears of rising inflation and overheating.
But it also challenges the Biden administration’s hopes for a rapid improvement in the economy and the prediction of Treasury Secretary Janet Yellen that the U.S. could return to its fullness. occupation next year.
So what is the culprit of the disappointing data? Here are some plausible explanations.
Volatile numbers
Economic data at a time of major changes in the labor market, such as one underway with the reopening of many activities, can be volatile, irregular and nonlinear, leading to large prediction errors.
During the initial rebound from last spring’s pandemic, economists greatly underestimated the strength of the recovery, while last month they clearly overestimated it. Federal Reserve officials have often said they do not judge the economy based on a single month of data, and this is even more so during the pandemic. Most economists reacted to the figures by treating them as a small coincidence, a temporary slowdown in the recovery, as opposed to a signal that was already fading.
The coronavirus has not disappeared
Economists may have been carried away by the rapid pace of vaccinations in the United States and the benefit this would bring to the labor market. Although the Biden administration achieved its goal administering 200m coronavirus shots last month and 100 million Americans are already fully vaccinated, the job report was drawn up the week of April 12, when eligibility for lava flows had not been extended to all north -americans. This meant that some unvaccinated workers were not yet ready to return to the labor market and companies were not hiring as quickly as expected, just for health reasons.
There may be some labor shortages
With 8.2 million Americans working fewer than in February 2020, it’s hard to conceive of a situation where employers have trouble finding workers to fill jobs.
But mismatches between labor supply and demand may begin to slow the recovery. After more than a year of the coronavirus crisis, it is possible that some workers have severed ties with their former employers, moved house or faced a reconfigured family situation that hinders their ability to return to work. to work. Meanwhile, some public transport the systems work with limited hours, slowing down the mobility of some workers.
Government support may be too full
Republican lawmakers and some business groups quickly identified their preferred culprit for the low job creation figure: overly generous government profits. The U.S. Treasury has not only sent $ 1,400 stimulus checks to most American families to ease pressure on household finances, but has set a surcharge of 300 by early September. weekly dollars in federal unemployment benefits.
The criticism is that these payments reduce the incentive for Americans to look for work. But other labor market data do not support this thesis. For example, the latest weekly count of initial unemployment claims showed a drop in claims for unemployment benefits. below 500,000 for the first time since the initial 2020 closings.
Many parents are still trapped
Job data exposed, as has become customary throughout the pandemic, a flawed gender difference in the nature of recovery. While men continued to return to the workforce last month, women withdrew from it, i.e. fewer females they were working or looking for work compared to the month of March.
The most likely cause of this may be the fact that many schools have only partially reopened and still lack services such as extracurricular care for children. Because women disproportionately bear the burden of caring for children, they are reluctant to return to full-time work. They can postpone any movement to September, given the uncertainty about the availability and conditions of summer camps.
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