The early economic signs indicate that we may already be in a “V”-shaped recovery — or at the very least a strong checkmark-shaped recovery — as we cautiously emerge from the coronavirus shutdown.
As Federal Reserve Bank Chairman Jay Powell admitted earlier this week, we have experienced a welcome “bounce back in economic activity,” and “have done so sooner than expected.” The economic data from the past two months make the point.
The May jobs report gave us the first indication that the post-pandemic rebound would be something special, revealing that employers had created a record-shattering 2.5 million jobs in a single month, beating economists' expectations for a loss of around 9 million jobs.
Most economists anticipated that the trend would continue, but few foresaw just how stellar the June jobs report turned out to be. Last month, the country gained a mind-boggling 4.8 million new jobs, blowing past consensus expectations of around 3.7 million. As an added bonus, last month’s total was revised upward by nearly 200,000 jobs, bring the two-month gain to 7.5 million jobs.
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Even though the labor force participation rate rose sharply, meaning more people began looking for work, the nationwide unemployment rate nonetheless plummeted in June by more than two full percentage points, falling from 13.3 percent to 11.1 percent, also beating economists’ expectations of a 0.8 of a percentage point decrease to 12.5 percent.
Those are some incredible numbers! But what else were we seeing in the economy?
In May, retail sales increased by a record 17.7 percent, soundly beating economists’ expectations of around 8.4 percent. This increase in retail sales — following three months of declines — bodes well for a return to positive economic growth. Consumer spending accounts for about two-thirds of our economic output, and retail sales account for about a quarter of consumer spending.
New home sales, a leading indicator of housing market health, were up 16.6 percent in May, beating economists’ expectations of a 1.9 percent increase — with many economists having forecasted negative sales in May.
The renaissance is taking place across the board as state and local officials roll back their lockdown orders.
The National Association of Realtors recently reported that its index of pending home sales, a forward-looking indicator based on contract signings, rebounded by a record-setting 44.3 percent in May, driving the index to 99.6, the highest month-over-month gain since its inception in January 2001.
So how about June? It’s obviously early, but we have some data in addition to the jobs numbers.
Manufacturing, which represents about 11 percent of the U.S. economy, saw a big positive jump in June for the second straight month. The Institute for Supply Manufacturing survey showed that 52.6 percent of companies said their businesses are growing, up from 43.1 percent in May. That’s the best score since April of 2019 — and, of course, it beat economists’ expectations of 49.5 percent.
Consumers saw the writing on the wall in June even if the economists missed it — again. The Conference Board, a New York-based research organization, said that its Consumer Confidence Index rose to 98.1 in June from 85.9 in May, the biggest jump since 2011 and beating economists’ expectations of 90.5.
Not wanting to miss out on all the positivity, the stock markets — which are forward-looking — closed up nearly 20 percent for the quarter ending June 30, their best quarterly percentage increase since 1998.
Bottom line: the economic improvements over the past two months have been tremendous.
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The renaissance is taking place across the board as state and local officials roll back their lockdown orders, though the gains are naturally being led by industries that were hit hardest by the pandemic, including leisure and hospitality (2.1 million new jobs), retail (740,000 new jobs), education and health services (568,000 new jobs), and manufacturing (356,000 new jobs).
There are plenty of lockdown orders still in place all over the country, meaning we’ve got ample potential for additional growth just by continuing to responsibly return to normal, even if we occasionally need to douse the embers of the pandemic here and there.
This unprecedented “V”-shaped recovery is exactly what President Trump predicted at the height of the COVID-19 downturn. Based on his track record of presiding over record-setting economic prosperity before the foreign pandemic reached our shores, I’ve always had confidence in the president’s ability to guide us through this crisis.
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Now that the bounce-back has begun, I’m excited to see how his pro-growth economic agenda of middle-income tax cuts, targeted deregulation and genuinely free trade will fuel our national resurgence.
The “V”-shaped economic recovery has only just begun, and while there may be some coronavirus flare-ups along the way that force us to slow things down, we’ll have nothing to worry about as long as we keep President Trump’s pro-growth economic policies in place.