Economic Recovery Scorecard – September 2021

Economy has Recovered 97% of its Recession Losses

Peter Bernstein, Chief Economist,, 312-431-1540 x1515

The September RCF Recovery Scorecard reached a new high, showing that the economy has recovered 97% of its recession losses.  Seven of our 16 measures are more than 100% recovered from the recession, up from five in our August scorecard.   The two least recovered variables are vehicle sales (54%), which we discussed in our last report, and the labor force (61%) which we will discuss later in this report. 

Although the September jobs report was disappointing, with an increase of just less than 200,000 jobs, other labor indicators were more promising.  The unemployment rate fell to a post-recession low of 4.8%, wages and salaries grew solidly as did the number of full-time jobs.  Altogether, 11 of our 16 measures improved in the last month. 

Notes and methodology:  All data are seasonally adjusted monthly values.  Variables 4 through 9, and 13 are data from September; all others are from August. 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 95% 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.

The Labor Force Problem

As of September, the labor force has only recovered 61% of its recession losses.  It fell 4.9% in April 2020 and remains 1.9% below its pre-recession peak.  Although these percentage losses are the smallest of any of our 16 measures, they are especially large when compared to labor force declines in previous recessions.  Even at the worst of the Great Recession, the labor force only fell 1.5% from its peak.  In the 2001 recession, it only fell 0.4%. 

Clearly, the pandemic-recession has affected the labor force differently than past downturns.  Many potential workers are out of the labor force because they fear infection, or because they feel wages available to them do not offset the health risks associated with employment.  Another little discussed reason behind the labor shortage is that millions of Americans are at least temporarily away from work because they are sick with Covid, quarantining and unable to work, or caring for someone who is ill.  The Labor Department reported that during September 1.5 million people were not working because of illness, either to themselves or a family member. 

But there is something else going on that explains the labor shortage that is not related to the Covid-19 pandemic.  The working age (15 – 64) population of the United States has stopped growing!  During the 5 years ending in 2000, the population of people aged 15 – 64 increased by 12 million, an average of 2.4 million more potential workers each year.  That slowed to an average of about 1 million new potential workers per year in the 2010s.  And over the past 5 years, the working age population has declined.  These trends pre-date the pandemic though sadly the pandemic has further reduced the working-age population.  As a result, we should expect labor shortages to persist well after the pandemic finally ends. 

Source:  US Census

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