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M. Ray Perryman

The Economist: Coronanomics

Business
Wednesday, January 12, 2022

Literally since the pandemic began, I have cautioned that, unlike previous economic dislocations, this one is inextricably linked to a health crisis. Complete recovery can only occur when we reach the point of peaceful coexistence with the virus. Nowhere is this phenomenon more evident than in the job market.

COVID-19 and measures to slow its spread caused the disappearance of well over 22 million US jobs in just two months (March and April 2020). Each of these lost positions represented an associated reduction in income and financial security. For many families, the consequences included increased stress, hunger, and myriad other issues.

As hiring began to resume, it was a tremendous relief. Through the summer of 2020 as things gradually reopened, millions of jobs were restored, with 2.8 million in May, 4.8 million in June, 1.7 million in July, and 1.6 million in August. During that time, COVID-19 cases were generally trending in the 20-50,000 daily range. Much of the economy remained closed or curtailed, but enough had been learned to permit some progress.

During the fall of 2020, however, cases rose. It was a natural outgrowth of the restoration of activity and the properties of the virus, but uncertainty increased. Worse, hospitalizations and deaths rose sharply. Not surprisingly, the pace of job gains stalled, even turning negative in December 2020 (-306,000).

Cases dropped in early 2021, with vaccination programs rolling out and the virus better understood. Daily case levels fell from the 100,000 range in early February to about 55,000 in March, but rose to nearly 70,000 in April. Correspondingly, monthly job gains were 536,000 in February and 785,000 in March, but fell to 269,000 in April.

Summer 2021 saw national case numbers at their lowest point since the pandemic began; on June 19, 2021, the seven-day average reached 11,518. Job gains through the summer were again strong (962,000 in June and 1.1 million in July).

Then came Delta. Cases ratcheted up through late summer, topping 160,000 per day by September. The pace of job growth also fell, with 483,000 in August and 379,000 in September. As this variant waned, job growth again increased, up 648,000 in October.

Now, there is Omicron. Case numbers are the highest ever, and the economy is once again expanding at a notably slower rate. There is evidence that Omicron cases are generally milder, and experts are also optimistic that the Omicron surge will peak quickly (let’s hope).

The bottom line is that as the virus increases, job growth slows. Despite the heated rhetoric to the contrary, the best (and, indeed, only) path to lasting momentum is to do everything that we can (vaccinations, therapeutics, behavior, etc.) to put the pandemic behind us. Stay safe!

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 2,500 clients over the past four decades.

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