Economic Recovery Scorecard – July 2021

Labor Markets Catching Up to Rest of Economy

Peter Bernstein, Vice President,, 312-431-1540 x1515

RCF’s Economic Recovery Scorecard for July was at 93%, up from June’s revised reading of 92%.  The increase was driven by improvements in our six employment-based metrics (4 through 9 in the table below).  Full-time employment, the number of unemployed, and the unemployment rate have each recovered at least 80% of their recession losses in July, marking the first time any of those variables reached this mark.  Vehicle sales and new building permits both declined from the previous month, reflecting shortages and higher prices which have constrained both the auto and housing markets.  All in all, five of our 16 metrics have recovered more than 100% of their recession losses, while only the labor force remains substantially depressed. 

Although not one of our monthly measures, 2021Q2 real GDP, released in late July, exceeded its pre-recession level reached in 2020Q1.  Of course, GDP would be expected to grow over time meaning that the economy is still operating below its long-term trend.   

Notes and methodology:  All data are seasonally adjusted monthly values.  Variables 4 through 9, and 13 are data from July all others are from June. Example calculation for economic variable #1, real income less government transfers fell 8.0% from its February 2020 value to its low point in April 2020.  In the latest available report, the variable was 0.4% below its peak value.  Therefore, it has recovered 96% of the loss. Data Sources: #1, 2, 3, 12, 13: Bureau of Economic Analysis; #4, 5, 6, 7, 8:  Bureau of Labor Statistics; #9: U.S. Employment and Training Administration; #10: Federal Reserve; #11: Bureau of the Census; #14, 15: Bureau of the Census and U.S. Department of Housing and Urban Development, #16:  National Association of Realtors.

Pandemic: Phase 3

The biggest risk to the recovery is the recent surge in Covid cases, shown in the chart below.  Cases have risen substantially over the past two months.  Deaths have not risen nearly as much, in part because of increased vaccinations but also because deaths lag cases by three to four weeks.  Therefore, deaths will increase throughout August though they should remain well below peak levels from 2020 and early 2021.

Source: The New York Times. (2021). Coronavirus (Covid-19) Data in the United States. Retrieved August 10, 2021, from

While predominantly a health care issue, the third surge of Covid-19 could adversely affect the economy.  However, it is not likely that we will see the shutdowns that occurred in the earlier phases of the pandemic, mostly because the states hardest hit are also the states least likely to impose restrictions (e.g., Florida).  Nevertheless, people may change their behavior and we could see spending shifts away from physical stores back to online retailers, and away from in-person services to goods purchases. 

The continued risk of infection is one of the reasons the labor force participation rate is the least recovered variable in our scorecard.  Moreover, several companies have delayed their planned “back-to-work” schedules.  One silver lining is that the recent surge has led to increases in the vaccination rate.  Full FDA approval of the vaccines is expected soon which should also increase vaccinations. 

Appendix – Recent History of Recovery Scorecard

Note:  Historical data are often revised so comparisons with earlier RCF Scorecards may reflect the impact of revisions. 

Monthly Recovery Percentages