Economy has Recovered 94% of its Recession Losses
Peter Bernstein, Vice President, pbernstein@rcfecon.com, 312-431-1540 x1515
RCF’s Economic Recovery Scorecard for June was at 94%, unchanged from May’s reading. Eight of our 16 metrics improved while 7 declined (and 1 was unchanged) from their previous month’s values. Real wages and real consumer spending are both above their previous pre-recession peak levels, as is real income excluding government transfers which shows that the recovery, though obviously helped by government relief payments, is looking sustainable on its own.
Recovery Progress by Economic Variable
Notes and methodology: All data are seasonally adjusted monthly values. Variables 4 through 9, and 13 are data from June; all others are from May. Example calculation for economic variable #1, real income less government transfers fell 8.1% from its February 2020 value to its low point in April 2020. In the latest available report, the variable was 0.8 percent above its peak value. Therefore, it has recovered 110% 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.
Labor Markets Still Have a Way to Go
The economy added 850,000 jobs in June, the largest monthly gain since August 2020. That pushed the employment recovery to 70%, up from 66% in May. Nonetheless, labor markets continue to lag the other sectors of the economy, which is a typical pattern following recessions. The chart below compares the average recovery percentages for our six labor market indicators versus the average of the 10 other indicators that we follow.
Non-labor indicators are more than 100% recovered, meaning that on average their most recent values are higher than they were before the recession hit last year. While the labor market continues to improve, it has so far recovered only 76% of its recession losses. Leisure and Hospitality was understandably one of the hardest hit sectors, losing over 8 million jobs, or about 49% of the February 2020 workforce, of which it has recovered about 6 million. Education and Health Services lost a smaller number (2.8 million jobs) but has recovered less than 65% of those lost jobs. Good Producing employee numbers have been stable over the last six months at a level 880,000 lower than pre-pandemic numbers, while Real Durable Goods Orders are exceeding pre-pandemic levels by 20%. There are still gains to be made, though some jobs may be lost permanently to new-found efficiencies driven by the pandemic.
Appendix – Recent History of Recovery Scorecard
Note: Historical data are often revised so comparisons with earlier RCF Scorecards may reflect the impact of revisions.
