The economic rebound the country experienced after the initial impact of the coronavirus pandemic nearly 18 months ago is still in progress, state economists say.
U.S. unemployment rates were 5.4% in July, a drop from 5.9% a month prior, as employers filled close to 1 million jobs, Kansas City Federal Reserve President Esther George said Aug. 18. It’s a far cry from when the jobless rate skyrocketed amid the pandemic in April 2020 to 14.7% – the highest since the Great Depression.
“Seeing these steady job gains is important. It’s not clear that we will go back to the unemployment rate that we saw in early 2020, which was historically low,” she said of the national level of 3.5% in February 2020. “The pandemic has, of course, upended a lot of the ways people work.”
George was the keynote speaker for the Springfield Area Chamber of Commerce’s annual Economic Outlook, held this year at DoubleTree by Hilton. Chamber officials say roughly 330 people attended the event, which returned to an in-person gathering after being livestreamed last year. George and fellow speaker Charles Gascon, a regional economist and senior coordinator at the Federal Reserve Bank of St. Louis, attended virtually due to their organizations’ current travel restrictions.
Both economists pointed to job growth this year as a strong indicator of the economy’s continued recovery, as 4.3 million jobs were created through the first seven months of the year, according to the U.S. Bureau of Labor Statistics. However, employment levels are still down 5.7 million jobs, or 3.7%, from a pre-pandemic peak in February 2020.
George said a shortage of people in the workforce suggests the labor markets have not fully recovered. She said disruptions last year such as in schooling and day care needs for children forced some workers to drop out of the job market. That, paired with enhanced unemployment benefits, which ended in the state in June, have continued to play a role in potential workers sitting on the sidelines this year, she said.
“My expectation is we could well see [economic] growth step down a bit, but it’s going to remain robust over the next year or so,” George said. “The labor market looks like it’s poised to continue to recover.”
She said a possible disruptor is the lingering presence of the virus as the country deals with a surge in COVID-19 cases due to the delta variant. It could fuel consumer uncertainty and delay ongoing economic recovery, she said. The national seven-day average of daily cases on Aug. 17 was 130,121, a nearly 50% increase since the start of the month, according to Centers for Disease Control and Prevention data. Locally, the Springfield-Greene County Health Department reports the seven-day case average at 114, as of Aug. 18.
Gascon said the unemployment rate in June for the five-county Springfield metropolitan statistical area and Missouri, at 4% and 5.1%, respectively, will remain below the national average for the remainder of the year. He projects Springfield will drop to 3.3%, Missouri will lower to 4.1% and the national jobless rate will be 5.6%.
“Job growth has been strong and is expected to remain relatively strong throughout the year,” Gascon said.
Mark Walker, CEO of Strafford-based trucking company TransLand, certainly hopes so. He said his industry’s worker shortage is somewhere between 60,000 and 100,000.
“We’re short about 10%-12% on drivers over the past year,” Walker said of his workforce at TransLand, and that equates to around 20 employees.
He said driver referral and sign-on bonuses are in place at his company. The referral bonus is roughly $3,700 paid out over one year while new drivers can receive $1,000-$3,000 after completing orientation.
“In our industry, we’re seeing baby boomers retiring more,” he said. “The pipeline of young people isn’t there, so workforce development becomes a whole lot more critical.”
George said she expects the inflation level, which has spiked in recent months, to begin to moderate at some point. Over the past year ending in July, the consumer price index increased 5.4%, which is the largest jump since August 2008, according to BLS data.
“What we see today is an economy that shows clear signs of demand running ahead of supply and pushing up inflation,” she said, noting consumer spending is exceptionally strong right now, boosted by government relief money and low interest rates.
Retaining the near-zero interest rate, which is set by the Federal Reserve, is in the foreseeable future, George said, noting it will take time to make judgments on whether inflation will fall back or persist.
“Without question, the combination of fiscal and monetary policies put forth at the onset of the pandemic certainly bridged our economy to be able to transition from a deep contraction to one of robust rebound,” she said. “That has been a very positive characterization of our economy.”
The Economic Outlook event was organized by the Springfield Business Development Corp., the economic development arm of the chamber. Next up in the chamber’s annual series is the Manufacturing Outlook, scheduled Dec. 8 at White River Conference Center.
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