The U.S. economy added 2.5 million jobs in May and the unemployment rate fell to 13.3 percent, roundly beating economist expectations of Great Depression-era figures.
The monthly unemployment data, released Friday by the Bureau of Labor Statistics, is nonetheless a reminder that the economic pain from the coronavirus pandemic is still reverberating, despite a phased reopening of businesses across the country.
While states have been gradually started to open back up, looting following some social justice protests over George Floyd’s killing in Minneapolis at the hands of the police will undoubtedly delay the national recovery, said Diane Swonk, chief economist at Grant Thornton.
“There is little doubt that small business and retail failures will be accelerated by the turmoil. Large stores with insurance will make repairs and reopen, while the smaller businesses holding on by a shoestring will close for good,” Thornton said.
The coronavirus pandemic has paralyzed the economy, pushing up unemployment to Great Depression-era levels, and obliterating all job gains since the Great Recession.
The Federal Reserve has taken a series of extraordinary measures to shore up the nation’s financial system during the crisis, and the government has poured trillions of dollars into the economy with its stimulus packages and the Paycheck Protection Program, designed to protect local businesses who might otherwise need to lay off employees.
Congress is currently considering another $3 trillion infusion into the economy that would extend various federal aid programs, including the $600 additional unemployment benefit that expires next month.
Still, the impact of the coronavirus pandemic will be felt for a decade and wipe almost $8 trillion off the nation’s economic growth, the Congressional Budget Office said on Monday. The agency also projected that economic output would plunge by almost $16 trillion over the 2020–2030 period.
The stock market soared after the numbers were released, expressing continued confidence that the worst may be over. The past few trading sessions have seen sharp gains for all three major averages as investors train their focus on the nation’s reopening and any positive signs of a recovery.
Friday’s government data comes on the heels of monthly employment numbers from private payroll processor ADP, which on Wednesday showed a total of 2.76 million people lost their job in May, a number far lower than the predictions of 8.75 million.
May’s figure is “obviously an awful number, but not as catastrophic as expected,” said Mark Zandi, chief economist at Moody’s Analytics, which prepares the report with ADP.
Additionally, jobless claims data released Thursday from the Department of Labor showed that the number of Americans seeking unemployment benefits continues to decline. Last week, around 1.8 million Americans filed for first-time jobless benefits. While still an outsized number, that total represents a continued contraction for an economic marker that has for weeks delineated the devastating human impact of the pandemic.
“The situation might be improving, but only ever so slightly. Far more needs to be done,” said Nick Bunker, Indeed Hiring lab’s director of economic research.