In a surprising turn, job numbers seemingly to be bounced back last week, signaling the end of the Coronavirus economic downturn. Contrary to predictions, job reports indicate a 1.4% drop in unemployment from April to May. Regarding this, President Trump triumphantly claimed, “George Floyd would be proud.”
However, critics claim that these numbers are misleading. With the inability to account for things like massive furloughs and the peculiarities of the coronavirus economy, there is likely a “misclassification error” with April job numbers. Businesses are reopening again, and this is only because of the economic stranglehold the lockdown has had thus far.
These new numbers indicate that forecasters have been overly pessimistic in their predictions related to the coronavirus economy. To calculate the unemployment rate, each month, the government does a survey of 60,000 households across the country, which represent the American population as a whole. This group is asked a series of questions to determine an accurate picture of their job-related activities. With this, The Bureau of Labor Statistics has addressed that there are challenges properly classifying workers during this time. At first glance, the strong numbers indicate that programs such as the PPP were effective and that as states continue to reopen, we are in the beginning of an economic recovery.
It’s true that shops and restaurants reopening and the government stimulus helped support rehiring. In fact, recent data shows that the economy has restored 2.5M jobs in May. Additionally, red metal has appreciated 10%, and this gain in copper prices hints at a sign of recovery. This improvement in the economy and unemployment rate was considered surprising as it comes at a time when forecasters had significantly lower expectations. Economists had even been expecting unemployment to possibly rise as high as 20% recently. However, as companies start to open up again and more employees return to work, their estimations may prove to be overly pessimistic.
On the other hand, the fact that the Trump administration is underplaying the miscalculation error is misleading and self serving. The President and his administration has been pushing anything positive related to the coronavirus in order to increase reelection chances as November quickly approaches. Now, millions of job losses are at risk of becoming permanent.
While Trump says the economy will be back and improved by next year, Federal Reserve Chairman Jerome Powell thinks differently. Powell noted that there have been “well more than 20 million people displaced in the labor market.” Trump brushed off the Chairman’s warnings, as it is politically in his best interest to do so: a low unemployment rate was the best thing Trump had going for him for his 2020 campaign. For weeks, the messaging from the White House has largely been that we are on the other side of the Coronavirus crisis. In fact, Trump keept his hopes up and went forward with a weekend rally in Oklahoma, despite the Covid-19 risks it posed. In the same spirit, the Trump administration is ignoring the possible miscalculation errors, hoping that this decrease in unemployment—even if it is inaccurate—will boost morale and support of his presidency.
The perception of the economy will directly affect the Trump administration, as their campaign strategy has relied heavily on leveraging a strong economy into reelection. Unemployment seems to be recovering, but the accuracy of it is yet to be determined. However, this can be drastically affected if there is a resurgence, which is becoming more likely as the number of cases is starting to increase again around the nation.