Recovery Strengthens but Labor Markets Still Lag
Peter Bernstein, Vice President, pbernstein@rcfecon.com, 312-431-1540 x1515
The economic recovery strengthened in April as RCF’s Recovery Scorecard index rose to 93% from March’s 86% level. 14 of our 16 economic variables improved in April, with 6 measures now higher than they were before the recession. Nonetheless, labor markets – typically the last segment of the economy to recover – remain below their pre-pandemic peaks. Payroll employment has recovered only 63% of its recession losses and the labor force has recovered just 57% of its losses. On the plus side, real consumer spending is now higher than it was before the recession, and while most of this was driven by government payments, real income less government transfers improved in April.
Recovery Progress by Economic Variable
GDP Has Nearly Recovered Its Losses
Real GDP, a quarterly metric not included in our monthly index, has nearly recovered its severe recession losses. From its peak in 2019Q4 to its low point in 2020Q2 real GDP declined 10%. A strong 2021Q1 put real GDP just 0.9% below its pre-recession peak, meaning that it has recovered more than 90% of its recession loss. While the recovery is faster than many expected during the depths of the Covid recession, real GDP remains about 4% below where it would have been if it had continued to grow at its trend rate.
Appendix – Recent History of Recovery Scorecard
