Nearly 10 million Americans are still out of work 3:23
New York (CNN Business) - America's
job market crashed a year ago, when more than 20 million jobs disappeared in a single month.
Now the economy is recovering, but millions of people are still out of work.
And despite months of record job growth last summer, and the pace of improvement picking up again this spring, the country is still far from healing.
The pandemic has distorted a previously strong job market, leaving lower-income workers, women, and Hispanic and black workers out of work.
The unemployment problem in the US is much worse than it seems
Now, the rollout of the vaccine, warmer weather and the reopening of the economy are paying off, helping the job recovery to strengthen.
Economists surveyed by Refinitiv forecast an average of 978,000 jobs in April, up from 916,000 in March.
But many of those predictions are well above average.
Jefferies expects 2.1 million jobs to be added, and Goldman Sachs is forecasting 1.3 million, according to Refinitiv.
Even so, the United States has lost millions of jobs, more than 7 million if the predictions come true, compared to the month of February last year, before the pandemic struck.
Economists are confident that many of these lost jobs will recover throughout the year.
These sectors created jobs in the pandemic and could keep the momentum going
This Wednesday, the ADP employment report, which analyzes private payrolls, indicated that 742,000 jobs were created in April, especially in the service sector, especially in leisure and hospitality.
The report, which has no correlation with the government's tally, has been below official figures in recent months.
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Meanwhile, weekly jobless claims fell to 498,000 last week, the Labor Department reported Thursday.
This was the first time during the pandemic that weekly requests fell below 500,000.
Although claims for unemployment benefits are still more than double what they were before the pandemic, there were 40,000 fewer claims last week than economists expected.
Applications for unemployment benefits fell to a pandemic low.
But there is still a job crisis in the US.
“The rebound in job growth is not as strong as we expected, especially considering the recent boost in demand from fiscal stimulus, and it could be a sign that increasingly widespread reports of labor shortages are starting to limit hiring, ”said Andrew Hunter, senior US economist at Capital Economics. In fact, there are some sectors in which companies find it difficult to find workers. Factories and manufacturers continue to have trouble finding skilled and even entry-level workers. Industry executives say many potential employees are concerned that these jobs are not sustainable because they could be sent abroad or replaced by automation.
This worker shortage could cause wages to rise, which could be reflected in the April employment report, according to economists.
Automation would be preventing employees from asking for salary increases
How the Federal Reserve might react
The Federal Reserve is also closely monitoring improvements in the labor market.
After all, achieving "maximum employment" is one of the central bank's two mandates.
The other is to keep inflation stable.
But the reopening of the economy, as well as rising raw material and energy costs, are driving prices up.
The Fed has repeatedly said that it is too early to talk about raising its ultra-low interest rates or reducing its monthly purchases of billions of dollars worth of assets.
But the confluence of economic data is setting the stage for a possible policy change later this year: The price index for personal consumption expenditures, which is considered the preferred measure of inflation by the Federal Reserve, stood at 2.3% in the year ending in March.
Coupled with the sharp rise in employment, this could cause the central bank to change its mind.
The Fed's objective is for inflation to be around 2%, but it has said it is looking for a moderately higher rate in the medium term.
The central bank could signal imminent change at its June meeting, "with a formal downsizing announcement at [the Fed's] September or November meetings," Citi economist Veronica Clark said in a recent note.
This would be in keeping with the agency's promise to alert the public well in advance of its policy change.
On Tuesday, Treasury Secretary and former Fed chair Janet Yellen said that interest rates may have to be raised to prevent the economy from overheating, causing stocks to fall.
Yellen retracted his remarks later in the day, saying the Fed is independent in its decision-making and was not making a prediction or recommendation.
Unemployment in the US