'This is a downturn unlike any other': Hamrick on the October jobs report and the state of the economy
Mark Hamrick, Bankrate.com Senior Economic Analyst, joined Yahoo Finance Live to discuss his biggest takeaways from the October jobs report and what it signals for the future of the labor market.
Video Transcript
SEANA SMITH: Stocks take a bit of a breather today. And this comes after we got that better than expected jobs report out this morning. 638,000 jobs added during the month. For more on that, we want to bring in Mark Hamrick. He’s a senior economic analyst at bankrate.com. And Mark, just your take on this report, because it is better than expected, the number we got.
Jobs growth, though, is slowing a bit. We’re still off around 10 million from where we were before the pandemic hit in the month of February. How would you characterize the labor market right now?
MARK HAMRICK: I think that we’ve– I’ve been conditioned so far this year to be prepared for disappointment, you know. No vacations, don’t go dining out of the house kind of a thing. And so I was sort of bracing for something that was going to come in on the low side of expectations. But when you get a full percentage point drop in the unemployment rate that’s coupled with an improvement in labor force participation, that’s improvement in the unemployment rate, the likes of which we want to see.
And, you know, private payroll’s up by more than 900,000. Obviously we had the headline number decline because of the drop in government employment. And a big part of that is, of course, what we knew was going to happen. And that’s the loss of the jobs that were put together to conduct the 2020 census.
You know, obviously, we’re 24 hours out from Chairman Powell’s news conference. And I think that he has done a very good job of characterizing– obviously it’s a job where the economy is. And, you know, he’s talked very often about how the recovery has at times been better than expected. And I think this is one of those monthly reports that certainly falls under that theme.
But, you know, I want to be very clear that this is not time to jump up and down and talk about mission accomplished with respect to the healing of the economy. There’s still a lot of people who are unemployed in this report, 11.1 million. And so we’ve restored a good part of the 22 million that were lost in March and April. But there’s still broad cross sections of the public that are severely adversely affected by this downturn. And the earlier guest was right. It is a K-shaped recovery, and we need to remember that.
ADAM SHAPIRO: So let’s talk about a specific in the report and help us understand whether we should be concerned or how to deal with it. 3.7 million is the number of permanent job losers. And we hear the Fed talking about the concern of not being able to bring some of this permanent job loss back. What are we seeing in this data?
MARK HAMRICK: Well, I think we knew that was going to be the case. And that’s one reason why it is urgent that members of Congress and the president get together on a package of stimulus legislation even during the lame duck session. That’s a lesson that we learned from the last recession that there is a high degree of long-term job loss during these downturns.
But this is a downturn unlike any other, during the like none other. And so to the extent that we are now about 2x in terms of where we were earlier this year with respect to the unemployment rate as well as where the payrolls are going. I think that that is a positive sign. But, you know, consistent with that K-shaped recovery idea, there are going to be some people who are going to be hurting for a long time from this.
And many of those are in the most financially fragile position. Think about those who have been affected. It’s those who have to go to their workplace, can’t work from home. It’s those who don’t have a college degree. It’s those who don’t have a high level of assets and may not own their own home. And so that’s another aspect of the have and have not aspect of this.
SEANA SMITH: So when we’re going off of that, how are you taking that into account when you’re just trying to determine the likelihood that we’ll see growth this quarter? We just heard Nouriel Roubini earlier today saying that best case scenario is going to be just under 2%. How do you read that?
MARK HAMRICK: Well, here we are. We’ve completed essentially the first week of November, you know, in Q4. And I just think it’s way too early to be forecasting a big change in the growth trend in Q4. I think it’s still the consensus that by the end of the year, we’ll be underwater with respect to growth. And, you know, as of the last GDP reading, we were still 3 and 1/2% below where we end at 2019.
Obviously if we can outperform those expectations, I’ll be the first to celebrate that. But I think we still need to be quite cautious from all the readings that we’ve been hearing earlier about the fact that COVID is surging again. And even if governments don’t restrict, I think a large number of workers, consumers, and employers are going to restrict themselves. So then it’s clearly a downside risk for the economy.
