Evgeniya Duzhak, regional policy economist at the Federal Reserve Bank of San Francisco, stated her views on the current economy and the outlook as of February 10, 2022.
- The improvements in the labor market reflect the economy’s robust recovery from the coronavirus pandemic. The unemployment rate in January stands at 4.0%, close to the natural rate of unemployment which we estimate to be around 3.8%. Demand for workers remains strong, with 467,000 jobs added in January 2022 and noticeable upward revisions to the prior two months. Some of the gains were offset by updated population estimates. Overall, total employment is still 2.9 million jobs below its pre-pandemic level. Labor force participation stands at 62.2%, below its pre-pandemic level in February 2020 of 63.4%.
A breakdown of unemployment rates across various demographic groups displays significant disparities, with unemployment among Blacks and Hispanics typically higher than rates for Asians and Whites. In addition, the magnitude of these disparities varies with the business cycle, rising with recessions and declining with expansions. Thus, the unemployment gap between Black and Hispanic workers, on the one hand, and Asian and White workers, on the other, rose greatly during the 2007-08 financial crisis. The ensuing long economic expansion through 2019 helped to significantly reduce unemployment among Black and Hispanic workers, narrowing the gap with the other demographic groups.
- While unemployment rates for Black and Hispanic workers as well as male workers has generally been more sensitive to business cycle downturns than unemployment for Asian, White, and female workers, the pattern during the recent pandemic recession has been different. In particular, unemployment among Asian workers rose more during COVID-19, while Black unemployment rose much less in comparison to past recessions.
- Sectors that have tended to lose the greatest number of jobs during a recession include construction, production, transportation, and material moving, while the recent pandemic downturn has had a more adverse impact on service industries and occupations with higher social contact. For example, Asian restaurant workers, especially those with lower education, experienced a relatively higher rise in unemployment. Increases in the unemployment rates for Black and Hispanic workers were softer due to their higher representation in occupations in the construction and production sectors. Consequently, the gap between groups with the lowest and highest unemployment levels is not as wide as it has been in past recessions. Current unemployment rates are close to their pre-pandemic levels for most demographic groups.
Chosen excerpts by Job Market Monitor. Read the whole story @ Federal Reserve Bank of San Francisco | FedViews: February 10, 2022