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Based on reports from the Department of Labor, the unemployment rate is consistently lowering from highs in the spring.
Economic experts say the economy can bounce back more quickly because there is money to be spent still. In 2008, there was a liquidity crisis.
Long term unemployment has risen, while temporary unemployment has decreased.
In 2020, it’s hard to find good news. But according to Congresswoman Vicky Hartzler, R-Missouri, the economy is looking up.
Hartzler, the 4th District representative, posted on Twitter about the latest Department of Labor report on Nov. 6.
"Great October jobs report! @USDOL reports 638,000 new jobs last month, beating the 530,000 economists expected. Unemployment rate falls to 6.9%, also beating expectations," Hartzler wrote. "Labor force participation rate rose 0.3 points to 61.7%. America is bouncing back!"
According to Department of Labor data, Hartzler’s data is correct. But we wondered whether the numbers mean the U.S. is "bouncing back" from the recession caused by the coronavirus pandemic.
We tried to contact Hartzler but received no response. So, we decided to talk to economics experts to see if Hartzler is right.
According to a news release from the Bureau of Labor Statistics, the U.S. unemployment rate in February 2020 was under 4%. In April, as the COVID-19 virus spread, it skyrocketed to over 14%. Since then, the unemployment rate has been steadily declining. As of the October report, it was around 7%.
Though we are still not back to where we were in February, MU economics professor Alina Malkova says the economy looks good. She says the current recession is different from the recessions we have seen before, like in 2008.
"We can predict that we will recover quickly," Malkova said.
In 2008, people were running out of money or going into debt. That recession took years to recover from. In early 2020, people had money, but they couldn’t spend it because of business closures and shut-downs.
"And when the economy started to open again," Malkova said, "they started to spend money very quickly."
This results in what economists call a "V curve" or a "V-shaped recovery." This occurs when economic recovery creates a V-shaped curve on a graph, signaling an economy is bouncing back.
The graph is not currently a full "V", and experts say we still have months to go. In comparison to the 2008 recession though, MU economics and public affairs professor Peter Mueser says this is a quick recovery.
Mueser says there are some things we should keep an eye on though, such as people who have been unemployed long term.
"In fact, there are more long term unemployed people," Mueser said. "There's a substantial number of people who are sort of waiting for jobs. But nonetheless, you can't say that the statistics don't look encouraging."
According to data from the Bureau of Labor Statistics, temporary unemployment fell by 1.4 million from September to October. Long term unemployment actually increased by about 1.2 million in that same time period. Long term unemployment is defined as someone who is jobless for 27 weeks or more.
For context, in February 2020, over 1.1 million people were unemployed long term. In October, there were about 3.6 million people unemployed long term.
If COVID-19 cases continue to increase and businesses shut down, we could see another increase in unemployment. But, Malkova said similar dynamics for a recovery should apply, too.
Citing new jobs numbers, Hartzler said that "America is bouncing back." The unemployment rate, which had risen by more than 10 points from February to April, is steadily falling again. However, there is other jobs data that shows reason for continued concern about the state of the economy. For example, the number of people with long term unemployment actually grew by about 1.2 million from September to October.
Because Hartzler’s claim was accurate but left out some details, we rate her claim Mostly True.
Vicky Hartzler Twitter page, Nov. 6 Twitter Post, Nov. 9 2020
US Bureau of Labor Statistics, Economic News Release, Nov. 11, 2020
US Bureau of Labor Statistics, February Economic News Release, Nov. 16, 2020
US Bureau of Labor Statistics news release (PDF), Nov. 12, 2020
Email exchange, Joseph Haslag, MU professor of economics, Nov. 10, 2020
Interview, Peter Mueser, MU professor of economics and public affairs, Nov 12. 2020
Interview, Alina Malkova, MU professor of economics, Nov. 13, 2020
Investopedia, V-Shaped Recovery, Nov. 15 2020
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