IN THIS ISSUE:
1. Jobless Rate Fell to 11.1% & Record 4.8 Million Jobs in June
2. More & More Americans Losing Their Jobs Permanently
3. Payroll Protection Program Extended Another 5 Weeks
4. Alpha Advantage Strategy Having Best Year Ever in 2020
For the second month in a row, the Labor Department reported last week that the economy added a record number of new jobs in June, vastly outpacing forecasters’ pre-report estimates. This far better than expected report is leading many economists to refigure their growth forecasts higher for the second half of this year.
However, it is important to note that the cutoff date for last month’s job survey was June 12 – before several governors scaled-back or halted business reopenings due to the latest surge in COVID-19 cases. What happens with the coronavirus pandemic just ahead will largely determine if we are out of the latest recession or not. The last thing we want is another economic lockdown. Expect markets to be very jittery just ahead.
And finally, while the rising jobs numbers look promising, let us keep in mind the increases have been mostly caused by Americans returning to their old jobs. More importantly, under the surface of the June jobs report, the number of workers who have permanently lost their jobs continues to rise at an alarming rate. These figures argue that we’re still in a recession.
It’s a lot to talk about, so let’s get started.
Jobless Rate Fell to 11.1% & Record 4.8 Million Jobs in June
Last Thursday’s unemployment report for June was quite the shocker. The Labor Department reported that the headline unemployment rate shrank to 11.1% in June from 13.3% in May and 14.7% in April. That was considerably better than economists’ pre-report forecast of 12.4%, and despite the fact that significantly more workers were accurately counted as unemployed in June, compared with the last two jobs reports.
Even more surprising was the news that the US economy created a record 4.8 million new jobs last month, nearly double the 2.7 million new jobs in May. That was also far above the pre-report consensus of 2.9 million new jobs for June.
Still, the US labor market is operating with about 15 million fewer jobs than in February, the month before the pandemic struck. Moreover, the country has seen a new increase in coronavirus cases that has led some states and businesses to change course on reopenings. Several states, like Texas, have just closed certain businesses down for a second time.