America will recover all jobs lost during Covid by this summer, Fitch says
'We really shouldn't panic': CNN reporter breaks down US economy shrinkageReplayMore Videos ... (15 Videos)'We really shouldn't panic': CNN reporter breaks down US economy shrinkageAnalyst: 'Lockdown in Shanghai will rock China's economy''Puts me on the street': Americans forced out of homes as rents skyrocketInside the American struggle with rising energy prices3 reasons why Deutsche Bank is forecasting a recessionForget oil. Here's how Russia's war in Ukraine is jacking up food prices.European Central Bank buckles down on price stability Why mortgage rates will likely continue to riseUS Treasury Secretary: This is what's hurting pandemic recoveryIMF cuts global growth forecast as war in Ukraine continuesHow China's lockdowns may affect the US economyChina's economy headed downward as lockdowns tightenWhat the Fed needs to do as recession looms over US economyYellen sends warning to countries 'indifferent' to Russian sanctionsSoaring food prices are pushing food banks to the brinkNew York (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.These states have posted the most dramatic post-pandemic job gainsIf 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. Read More13 states are back to pre-Covid employmentSimilar 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 worriesIf 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. The US economy contracted. Don't panicOne 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 Fed's favorite inflation measure hit a fresh 40-year highThe 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. Click Here To Get Funded!