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This morning, we got some very good news about the recovery. The headline number of the jobs report, with 379,000 jobs created, was excellent—and almost double the expected 200,000. This is good news. When you look into the details, the news is even better. Clearly, the reopenings around the country have made a big difference in the job market. Looking forward, that trend will give us a real tailwind as vaccinations accelerate.
Dive into the Details
Private jobs. While the headline number was excellent, the details were even better. Private jobs created came in at 465,000, more than double the expected 200,000. The difference between private and total jobs came from a drop of 69,000 in state and local education jobs, which was simply a reversal of a spike the previous month. The private number says the jobs market is bouncing back in a big way.
Job gains. The job gains were also widespread. While a large share (355,000) came from the leisure and hospitality industry, this industry has been hit the hardest by the pandemic, so the gains are proportionate to the job losses. Those gains are also directly reflective of the state reopenings and suggest that consumers are stepping up again. As the medical risks and economy continue to normalize, those gains should continue.
It wasn’t just about bars and restaurants, however. Most other sectors, including health care, retail, business services, and manufacturing, also saw healthy gains. The one sector that lost jobs, construction, was due to the weather emergencies across large parts of the country. What these numbers are telling us is that almost all of the economy is growing and that the recovery from the damage of the third wave is proceeding fairly quickly.
Unemployment. Unemployment didn’t improve as much, dropping from 6.3 percent to 6.2 percent, and this number too provides some context. While the jobs report was quite strong, the damage to the labor market was substantial—and we are still in a fairly deep hole. The country is still 9.5 million jobs short of where we were before the pandemic; 3.5 million of those are in the leisure and hospitality sector. At February’s pace, we are still 10 months away from full recovery. For the remaining 6 million jobs, we are still a couple of years away at last month’s pace. One good month does not bring us back to normal.
A Good Start
It is, however, a good start. Remember, the third wave peaked only two months ago, and mass vaccinations started about a month ago. To have seen this kind of improvement this early in the normalization process is a good sign that it will accelerate as we get closer to normal.
This report also reduces the risks to the rest of the economy. Consumer spending, which is more than two-thirds of the economy, depends on both wage income and confidence. An improving jobs market helps with both. So far, the recovery has been supported by stimulus payments, and whether it was sustainable beyond that depended on whether the job market recovered. Now, with jobs coming back, it looks much more likely to be sustainable.
The Road Ahead
In other words, the jobs report is good news for today—especially for the people who have those new jobs—but even better news for tomorrow. Public policy and vaccines have substantially reduced the medical risks. Now, we can see that the private sector is stepping up to reduce the economic risks as well. We still have a ways to go, and there are real risks. But today’s jobs report means the road ahead is clearing.
