The shock US unemployment figures released on 5 June —2.5 million jobs were actually added in May although expectations were for a loss of 7.5 million—got us thinking. Just how fast could a “V” shaped recovery be? We therefore did some digging in the weeds of the employment figures to try and get a feel for what is driving the numbers and provide a back-of-an-envelope calculation of just how quickly employment could recover.

Not all unemployment is created equal

The best place to start this note is to look at the economic damage created so far. Through the past three months, outright employment figures have seen an unprecedented amount of jobs lost, which, to date, has been about 20 million, about two times the damage caused by the Global Financial Crisis (GFC).

Chart 1 US total employment


Source: Bloomberg

However, the interesting point from 5 June is that not all unemployment is created equal. Here is one (of the many) tables produced by the US Bureau of Labor Statistics, which shows how people are categorising their unemployment.

Table 1 Reasons for unemployment, US


Source: U.S. Bureau of Labor Statistics

Of the ~20 million people who became unemployed due to COVID-19, around 15.5 million currently believe it’s temporary. This is denoted in the top row of the red box, and is completely rationale from the employee’s perspective if we believe that, as the economy re-opens, they will start working again. This is not an unreasonable assumption given that three million of these temporarily laid-off workers just returned to work.

From these numbers, we can split those who have become unemployed into three categories.

Table 2 Unemployment categories

The difference between category 2 and 3 is that those in the former lost their jobs but will be seeking new employment, while those in the latter lost their jobs and will not be looking for new employment.