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America will recover all jobs lost during Covid by this summer, Fitch says

<i>Robert Nickelsberg/Getty Images</i><br/>America will recover all jobs lost during Covid by this summer
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Robert Nickelsberg/Getty Images
America will recover all jobs lost during Covid by this summer

By Matt Egan, CNN Business

The United States is rapidly approaching a major jobs milestone that highlights the historically strong economic recovery from Covid-19.

By the end of August, the labor market will have fully recaptured all jobs lost during the pandemic, Fitch Ratings projects in a new report shared first with CNN.

If that happens, it means payrolls would have returned to pre-crisis levels in barely two years. By comparison, Fitch said it took a staggering six years and five months for the jobs market to fully bounce back during the painfully slow recovery from the Great Recession.

The late summer target for recovering all the jobs lost from Covid-19 looks doable. The United States is only about 1.6 million jobs shy of February 2020 levels.

That means payrolls would need to grow by about 400,000 jobs per month to get back to pre-pandemic levels. The economy added 431,000 jobs in March and Friday’s jobs report is expected to show another 405,000 jobs were gained in April.

13 states are back to pre-Covid employment

Similar to Fitch, Moody’s Analytics is forecasting a return to pre-Covid employment in the third quarter, which ends September 30.

Parts of the country are already there. Thirteen US states, including Florida, Georgia, Colorado and Arizona, have already fully recovered all jobs lost during Covid, Fitch said.

One important caveat, however, is that the US jobs market has not fully recovered the jobs that would have been created had the downturn not occurred. Moody’s estimates that employment would be 4.5 million jobs larger than it currently is if the economy maintained pre-pandemic trend job growth.

Still, the projected return of pre-Covid employment this summer underscores the rapid recovery from the health crisis, due in part to unprecedented support from the Trump and Biden administrations, Congress and the Federal Reserve.

Boom-to-bust worries

If anything, the jobs market looks too hot, raising the specter of a boom-to-bust scenario where an overheating economy flames out because of high inflation.

Fitch warns in its report of “acute labor shortages in many states,” especially in the West and Midwest.

The ratio of job openings to unemployed people hit post-pandemic highs in 20 states in February, Fitch said. This key indicator of labor shortages is especially elevated in Nebraska, Utah and Montana, where the number of unfilled jobs is triple the number of unemployed people.

One problem is that some workers remain on the sideline, limiting the supply of labor. This is for a variety of reasons, including Covid-related problems, high child care costs and retirements.

Just eight states have fully recovered or exceeded their pre-Covid labor force participation rate, according to Fitch.

The labor force participation rate of Vermont, Nevada and Maryland remains more than four percentage points below pre-crisis levels.

The good news is that the very tight jobs market has lifted wages, especially among lower-income workers. And workers have the flexibility to quit their jobs and get better ones.

Yet wages are still failing to keep up with the 40-year high for prices. Inflation-adjusted paychecks are shrinking.

‘Unhealthy’ level

One concern is that the jobs market is too tight — and that is making inflation worse.

The Federal Reserve wants to avoid a wage-price spiral, where high prices cause workers to demand higher wages, causing higher prices and so on.

Fed Chairman Jerome Powell noted during a press conference in March that there are at least 1.7 job openings for every unemployed person nationally.

“That’s a very, very tight labor market — tight to an unhealthy level,” Powell said.

The Fed hopes to cool off the jobs market, and inflation, by raising interest rates.

The goal is for higher borrowing costs to ease demand, giving supply a chance to catch up. That should ease inflation, allowing the economic expansion to continue.

If that doesn’t happen, the Fed may be forced to raise interest rates even more aggressively, slowing down the economy to the point where it risks sparking a recession that sends unemployment rising once again.

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          “My administration is recommending that all Americans, including the young and healthy, work to engage in schooling from home when possible, avoid gathering in groups of more than 10 people, avoid discretionary travel and avoid eating and drinking in bars, restaurants, and public food courts,” Trump said.
          “It’s important for the young and healthy people to understand that while they may experience mild symptoms, they can easily spread this virus and they will spread it indeed, putting countless others in harms way.”

          1. I don’t see anything about a shut down in that quote, only recommendations. That’s the way things should have been handled the whole time. Provide information and recommendations and let people decide.

          2. Hey Barn, Do you know the difference between a recommendation and mandate? Why don’t you review you previous response and try and come up with an answer… I’ll wait..

            1. You are spot on- that was a lame attempt to confuse the less intellectual who hang around here all day unemployed. Kalamity Kate Brown signed the executive Orders to shut down our schools- public gathering points- and local businesses (13000 closed in the spring of 2020). President Trump didn’t sign a single shutdown except for airplanes coming in and out of China- Biden did ! Remember his mask mandates- shutdowns of national parks- federal workers… No Jab- No Job ! The smart ones around here will never forget- the haters will continue to try to deceive and lie to the masses. I’ll let you all decide who is who !

  1. Places in Bend still dont have enough workers. We the paying customers are suffering with terrible service. Half of them dont speak the language and are not trained right.

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