National jobless numbers shock, show improvement
Valley struggles as unemployment rate eclipses 20 percent
WASHINGTON — U.S. unemployment dropped unexpectedly in May to 13.3 percent as reopened businesses began recalling millions of workers faster than economists had predicted, triggering a rally Friday on Wall Street and giving President Donald Trump something to boast about amid his re-election bid.
The jobless rate is still on par with what the nation witnessed during the Great Depression. And for the second straight month, the U.S. Labor Department acknowledged making errors in counting the unemployed during the coronavirus outbreak, saying the real figure is even worse than the numbers indicate.
Still, after weeks of dire predictions by economists that unemployment in May could hit 20 percent or more, the news that the economy added a surprising 2.5 million jobs last month was seen as evidence that the collapse may have bottomed out in April at 14.7 percent and that a recovery is well underway as states loosen their lockdowns and let stores, restaurants, gyms and other businesses reopen.
“We are witnessing the easiest phase of growth as people come off temporary layoffs and come back to their employers,” said Harvard University economist Jason Furman, who led the White House Council of Economic Advisers during the Obama presidency. “And once employers are done recalling people, the much harder, longer work of recovery will have to proceed.”
Most economists had expected rehiring to kick in as shutdowns increasingly were lifted and people gradually resumed shopping and eating out.
“The surprising thing here is the timing and that it happened as quickly as it did,” said Adam Kamins, senior regional economist at Moody’s Analytics.
In the Mahoning Valley, the unemployment numbers look worse.
Numbers from the state for April, the latest that are available, show the unemployment rate in Trumbull County was 21 percent and 20.1 percent in Mahoning County.
The rates represent a 13.7 percent jump in Trumbull County and 13.1 percent increase in Mahoning County from March. Columbiana County saw the largest jump, 14.4 percent to 20.4 percent last month.
Numbers for May will be released June 23.
On Wall Street, the S&P 500 was up 2.6 percent around midday.
An exultant Trump seized on the report as evidence that the economy is going to come back from the coronavirus crisis like a “rocket ship.
“This shows that what we’ve been doing is right,” said the president, who has pushed governors aggressively to reopen their economies amid warnings from public health officials that the country is risking a second wave of infections on top of the one that has killed more than 100,000 Americans.
Still, the job market is in such a deep hole that it could take years to dig out, economists say. Most are forecasting unemployment in the high single-digits or low double-digits by the end of this year.
Economists had expected the government to report that employers shed 8.5 million more jobs in May on top of the 21.4 million lost in March and April.
Instead, nearly all industries added jobs, a sharp reversal from April, when almost all cut them. Hotels and restaurants added 1.2 million jobs in May, after shedding 7.5 million. Retailers gained 368,000, after losing nearly 2.3 million in the previous month. Construction companies added 464,000 after cutting 995,000.
“After a couple of months of terrible economic data, huge net job gains and a big decline in the unemployment rate in May are very good news,” said Gus Faucher, chief economist for Pittsburgh-based PNC Bank.
The better-than-expected result was bolstered by states relaxing restrictions on movement, loans to businesses under the Paycheck Protection Program, stimulus payments and expanded unemployment benefits, Faucher said.
“While the May jobs report is very encouraging, employment is still down by 19.5 million from February, and the unemployment rate is up almost 10 percentage points from earlier this year. If strong job gains continue, the labor market will quickly recover from the viral recession. But if job gains slow, the unemployment rate will remain elevated and the recovery will be disappointing as consumers turn cautious with their spending,” Faucher said.
Economists warn that until most Americans are confident they can shop, travel, eat out and fully return to their other spending habits without fear of contracting the virus, the economy likely is to remain sluggish.