July 2021 National Economic Outlook

Economy Officially in Recovery; Stronger June Job Growth

The National Bureau of Economic Research announced in July that a U.S. economic recovery began in May 2020. In dating the recovery, the NBER looked at a variety of measures, including real GDP, real incomes, employment, industrial output, and wholesale and retail sales.

Last year the NBER announced that a recession began in March 2020. Thus the Viral Recession lasted only two months (March and April 2020), making it the shortest recession on record. However, it was also the most severe downturn since World War II based on the decline in real GDP, job losses, the increase in the unemployment rate, and other measures. A recovery does not mean the economy is in good shape; for example, employment is still far below its pre-recession level. But it does mean the economy is improving.

The U.S. economy added 850,000 jobs in June, according to a survey of employers from the Bureau of Labor Statistics. This was the best month for job growth since August 2020. 

  • Total employment in June was 145.8 million. This is up 15.6 million from April 2020, when employment bottomed out at the start of the pandemic, but is still down by 6.8 million (more than 4%) from the pre-pandemic peak in February 2020. 
  • Private-sector employment rose by 662,000 in June, with government employment up by 188,000. Once again job growth was very strong in leisure/hospitality services as the economy continues to reopen and consumers spend their stimulus payments. 
  • The industry added 343,000 jobs in June, and has added better than 225,000 jobs for five straight months. Still, employment in leisure/hospitality services is down by 2.5 million, or 15%, from February 2020.

The unemployment rose slightly in June, to 5.9%, from 5.8% in May. The number of people employed in a survey of households (different from the survey of employers) fell by 18,000, while the number of people in the labor force rose by 151,000.

The unemployment rate is down from a peak of 14.8% in April 2020, but is still well above the pre-pandemic rate of 3.5%. And there are still about 3.5 million fewer people in the labor force now, compared to February 2020. The labor force participation rate (share of adults either working or looking for work) was 61.6% in June, unchanged from May, but down from more than 63% before the pandemic. This drop in the labor force is making it more difficult for some employers to find workers.

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July National Economic Outlook

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