After a slow down this spring, the American economy has resumed its robust growth. The number of new jobs increased by 943,000 in July, the most since August 2020 and well above what economists predicted. Moreover, June’s numbers were revised upwards to 938,000.
Meanwhile, the unemployment rate fell by a whopping .5 percent, from 5.9 percent to 5.4 percent. That is still well above the record-setting rate of 3.5 percent in February 2020, before the pandemic hit, but hardly more than half what it was in July 2020, when it stood at 10.5 percent.
Much of this jobs gain, over a third of the total, was in leisure and hospitality, as has been the case most of this year as more and more people have been dining out and government-imposed restrictions on social and economic activity were lifted. Accommodations (hotels and motels) saw 74,000 new jobs as travel continued to increase. The arts and entertainment sector saw 53,000 new jobs.
But the economic outlook is not all good by any means. Initial unemployment claims are still about twice pre-pandemic levels. And inflation is running at the highest level in 30 years. Fed Chairman Jerome Powell says that that is only temporary. But if inflationary expectations become widespread, then inflation will continue. A computer chip shortage is causing supply line disruptions in many industries, contributing to the problem of too much money chasing too few goods. After all, even toothbrushes have computer chips in them these days.
And even though there are still 8.7 million people unemployed, businesses are having trouble finding workers, contributing to an epidemic of “We’re hiring!” signs around the country. A large part of that anomaly is surely due to the federal government supplementing state unemployment benefits to the tune of $300 a week. That makes the unemployment benefits of many low-wage workers higher than what they could earn on the job. These benefits are scheduled to end next month, and it will be interesting to see how their demise affects September and October job growth.
