If the lower unemployment rate in May is any indication, the country may be experiencing the shortest economic downturn since the 1930s.
As pointed out in a research brief by Marcus & Millichap, the US unemployment rate dipped to 13.3% last month. The country had reached 14.7% unemployed in April, the highest rate since 1948. Overall, 2.5 million jobs were added in May.
Leading the recovery is the leisure and hospitality sectors, which were the hardest hit industries when stay-at-home orders were mandated in March. Restaurants and bars added 1.4 million employees in May after many states moved into phase two or three of re-opening plans last month. In Texas, restaurants were allowed to re-open at 50% capacity and reported high foot traffic from customers eager for dine-in service.
The hospitality and leisure industries were bolstered by the Paycheck Protection Program loans and individual stimulus payments from the government to keep the service industry running. On June 5, the Paycheck Protection Program Flexibility Act was signed, meaning that the amount of the loan required to be used for payroll decreased to 60% from 75%, allowing business owners to allocate the loan towards rent or mortgage payments, utilities, and loan interest.
Developers can also feel relief that projects may still hit completion deadlines this year—the construction industry regained 464,000 jobs last month, mostly in residential building. The job gains totaled almost half of April’s job losses. The industry was included in phase one of re-openings in states, meaning that most construction projects were able to stay on schedule.
On the other hand, sectors that saw job losses in May were natural resources and mining, information, and government.
Despite the strong indicator of job growth in May as states start to re-open, a second wave of the coronavirus pandemic may hit in the fall. Proposals in Congress that may include a $450 bonus for returning workers and a larger wage subsidy for workers may help if the US were hit with more coronavirus cases and stay-at-home orders go into effect in the fall.