Employers brought back millions more workers in June as businesses began to reopen across the country. But the recent surge in coronavirus cases is threatening to stall the economic recovery long before it has reached most of the people who lost their jobs.
U.S. payrolls grew by 4.8 million in June, the Labor Department said Thursday. It was the second month of strong gains after April’s huge losses, when businesses laid off or furloughed tens of millions of workers as the pandemic put a large swath of economic activity on ice.
The job growth surpassed economists’ forecasts, and it was broad based, cutting across industries and demographic groups.
But the thaw is far from complete. There were still nearly 15 million fewer jobs in June than in February, before the pandemic forced businesses to close. The unemployment rate fell to 11.1 percent in June, down from a peak of 14.7 percent in April but still higher than in any previous period since World War II. The rate would have been about one percentage point higher, the Labor Department said, had it not been for persistent data-collection problems.
In an appearance at the White House on Thursday morning, President Trump hailed the numbers as “spectacular news for American workers and American families and for our country as a whole.”
The monthly jobs data was collected in mid-June, before coronavirus cases began to spike in Arizona, Florida and several other states. More timely data, also released by the Labor Department on Thursday morning, showed that 1.4 million Americans filed new claims for state unemployment benefits last week — the 15th straight week that the figure exceeded one million — and 840,000 others filed for benefits under the federal Pandemic Unemployment Assistance program.
With the resurgence of the virus adding new volatility to the outlook, economists fear that layoffs could accelerate now that states have begun ordering some businesses to close again. And they warn of another looming threat: the expiration of government assistance, in particular the enhanced unemployment benefits providing an extra $600 per week to laid-off workers. Without congressional action, those benefits will cease at the end of this month, potentially eliminating a key source of support not just for the workers but for the broader economy as well.
The Congressional Budget Office said Thursday that it expected the economy to grow rapidly in the next six months but still wind up nearly 6 percent smaller than it was when the year began.
“We’re in a very deep hole, and we just set ourselves back again,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “It’s difficult to climb out of that hole.”
The H.Wood Group, which operates a dozen bars, restaurants and nightclubs in the Los Angeles area, had just begun to dig out of that hole when the latest round of shutdown orders hit. The company spent weeks figuring out how to operate safely, installing plexiglass dividers between banquettes, eliminating reusable menus and adopting policies like temperature checks at the door and mandatory masks.
In June, that work appeared ready to pay off: Two of the company’s restaurants reopened, and three bars were set to reopen this week. Customers, eager to eat out after weeks of lockdown, snapped up reservations.
“The first two nights were a little weird,” as people adjusted to masks, face shields and temperature checks, said John Terzian, the company’s co-owner. “But after Night 3, I think people settled in, and honestly it felt perfect.”
Then on Sunday, Gov. Gavin Newsom ordered Los Angeles County bars to shut down; on Wednesday, he ordered restaurants to suspend dine-in service as well. Mr. Terzian, who had brought back roughly half his 400-person work force and was on track to bring back the rest, instead had to start telling people they were out of work again.
And while H.Wood is financially stable, he said, he will be slower to reopen next time, lest the authorities pull the rug out from under him.
“I think we would be really hesitant,” he said. “Staying shut we understood, but reopening and reshutting is just wrong.”
Economists say stories like Mr. Terzian’s drive home a central fact of the crisis: The economy can’t truly recover until the pandemic is under control.
“The virus drives the economics,” said Betsey Stevenson, a member of the Council of Economic Advisers under President Barack Obama who is now at the University of Michigan. If cases continue to rise, as health officials warn, “we’re not going to have people going back to work,” Ms. Stevenson added.
“In fact, we’re going to see more people staying home,” she said.
Total employment has grown the past two months because companies have begun recalling temporarily laid-off workers. But layoffs have continued as the economic effects of the pandemic ripple through the economy, reaching businesses and industries that were spared earlier.
The number of people reporting they had permanently lost their jobs rose in June even as the number of workers on temporary layoff fell sharply for the second consecutive month. And the share of Americans out of a job for 14 weeks or less fell in June, while the share unemployed longer continued to rise — another sign that while short-term job losses are abating, more enduring damage lingers.
“We’re going on four months now,” said Olugbenga Ajilore, a senior economist at the Center for American Progress, a progressive group. “There’s only so long that these businesses can hold out before it just doesn’t become feasible.”
The rebound in jobs has not been shared equally across groups. The unemployment rate for white workers has fallen more than four percentage points over the past two months, to 10.1 percent. For Black workers, the rate has fallen just over one point,