This Friday, the Bureau of Labor Statistics will release the February jobs report. As the winter wave of the pandemic recedes, the February jobs report is likely to show green shoots of progress in the economic recovery. While public health conditions are improving, COVID-19 cases remain worse than in summer 2020, likely resulting in a more muted recovery in February. These are the three things I’m watching for on Friday:
- Modest payroll gains: Friday’s report is likely to show the economic recovery finding its sea legs after the pandemic-forced slowdown in December. Despite the improving public health situation, any job gains will likely be muted.
- Stagnant unemployment and labor force participation: Both unemployment and labor force participation are likely to remain largely unchanged in February. The ongoing pandemic is continuing to hold many workers out of the labor force.
- Minority workers disproportionately impacted by the pandemic. Employment during the winter wave lagged for Hispanic and Asian workers but, as the recovery resumes in February, the gap may narrow slightly.
Permanent Layoffs Have Stagnated
Temporary layoffs fell in January as the economic recovery rebooted following the contraction in December. Permanent layoffs rose slightly in January and, although they have not accumulated further as some feared, these permanent layoffs have remained above 3 million since August. While temporary layoffs likely fell again in February as businesses reopened, the large level of permanent layoffs are a reminder that reopening is not the same as recovery.
Winter Wave Hits Minority Workers Harder
Minority workers have been harder hit by the ongoing pandemic. In particular, the winter wave has exhibited a similar pattern to the initial wave of the pandemic where Hispanic/Latino and Asian workers saw larger declines in employment due to their concentration in service industries disproportionately disrupted by the pandemic.
These month-to-month measures by race and ethnicity are volatile but, if the pattern holds, we would hope to see a small improvement in employment for Hispanic/Latino and Asian workers as the winter wave abates. Ultimately, however, the overall hit to employment for all minority workers has been harsher than for white workers.
Relief Bill Negotiations Frame Medium-Term Outlook
The positive impacts of the December relief bill are now starting to show up in economic data, as personal incomes surge and consumer spending follows. Negotiations on further relief are ongoing and will be critical to ensuring that the extended UI benefits don’t expire for millions of unemployed Americans in mid-March. Aside from the relief package, the broader reopening in the economy as vaccines are distributed more widely will provide a much-needed boost to service industries like food services and travel & tourism.
The next relief package will go a long way to determining the trajectory of the recovery in the coming months but, ultimately, getting the pandemic under control and accelerating vaccine distribution are the best possible economic stimulus.