When it comes to jobs: It's the pandemic, stupid

The pandemic has been befuddling economic prognosticators since its beginning, and it continues to do so. When cases of the Delta variant began to rise sharply this summer, many analysts assumed that it wouldn’t have a major impact on the economy. Despite the fact that about two-thirds of the working-age population has been vaccinated—or perhaps because the other third hasn’t been—it did have a major impact. Fear of the resurgent virus, coupled with related concerns about child care and other factors, have affected employment decisions across the economy. This was evident throughout the new jobs report…

Another positive aspect of the report may already be out of date. The government carried out its household and payroll surveys in the week that began on September 12th, and since then the seven-day average of newly reported covid cases has declined by about forty per cent, according to the Times. As cases have fallen, some real-time economic indicators, such as the number of restaurant reservations, have already rebounded a bit. If cases continue to fall, spending and hiring should pick up more strongly during the rest of the year. “There’s a case for optimism in the coming months, assuming the pandemic continues to improve,” Daniel Zhao, an economist at the jobs site Glassdoor, noted on Twitter.

The path of the virus remains the key variable. In a blog post after the jobs figures were released, the White House Council of Economic Advisers noted that “the economic recovery will not be complete until the public health situation is under control.” That has been the case since the initial lockdowns began, and it’s still true today. To misquote a James Carville axiom from Bill Clinton’s 1992 Presidential campaign: “It’s the pandemic, stupid.”