The U.S. added 1.4 million jobs in August, the Labor Department said Friday—the new data shows that while the labor market is making modest gains, the pace of recovery has slowed significantly thanks to the expiration of federal stimulus benefits.
Friday’s numbers were in line with the 1.4 million new jobs economists were expecting.
The economy added 1.8 million jobs in July, and 4.8 million jobs in June, and the unemployment rate fell from 10.2% to 8.4% after skyrocketing to 14.7% in April.
During the Great Recession, the unemployment rate peaked at 10.6% in January 2010.
Despite Augusts’ gains, the economy is still down 11 million jobs from February, before the coronavirus shutdowns began to take a massive toll on the economy.
The recovery is slowing in part because many of the stimulus measures from the CARES Act—like the Paycheck Protection Program for small businesses and the $600 weekly federal unemployment supplement—have expired over the last two months, leaving many Americans without the extra support that helped keep the economy afloat earlier this summer.
That slowdown also has economists concerned that layoffs once thought to be temporary might be permanent.
Friday’s jobs data comes as lawmakers in Washington remain deadlocked over the next federal stimulus package. Of the biggest points of contention is the price tag: Democrats passed their opening offer, the $3 trillion Heroes Act, in May, and the GOP countered in July with a $1 trillion proposal. Democrats offered to meet in the middle with a $2.2 trillion package, but White House negotiators rejected that offer. Republicans are now considering a pared-down $500 package that could be released as soon as next week, but the so-called “skinny” bill doesn’t have a good chance of becoming law without Democratic support. Earlier this week, Bridgewater Associates co-CIO Greg Jensen told CNBC that according to Bridgewater’s analysis, the economy needs another stimulus bill worth at least $1.3 trillion to sustain its recovery.
Major players in the airline industry, faced with the prospect that more federal aid might not be coming, have already begun planning for massive layoffs and furloughs. This week, United Airlines announced it would cut 16,000 jobs in October when federal funding from the CARES Act runs out. American Airlines has also said that it will eliminate 19,000 jobs in October unless a federal bailout program is extended.
1.8 Million Jobs Added In July As U.S. Economy’s Pandemic Recovery Falters (Forbes)
Thanks To Stimulus Spending, U.S. Debt Expected To Exceed The Size Of The Entire Economy Next Year (Forbes)
Economy Needs At Least $1.3 Trillion In New Stimulus To Sustain Recovery, Bridgewater CIO Says (Forbes)
Mnuchin: We Want To Extend Unemployment Insurance And Send Out More Stimulus Checks (Forbes)