The US jobs market and the country’s overall economic recovery from the pandemic continues to be strong. That was the key takeaway from the March unemployment report from the Labor Department.
US created 431,000 jobs in March, according to initial estimates, and the employer’s unemployment rate dropped to 3.6%, just shy of its pre-pandemic level, which itself was a low not seen in more than 50 years.
Additionally, the estimates from the January and February employment reports were revised upward, adding nearly 100,000 jobs to those already strong months.
It’s another better-than-expected report in what has already been 12 months of solid jobs growth, says Mark Hamrick, chief financial analyst at Bankrate.
“The nation’s unemployment rate dropped two-tenths of one percent, more than expected,” Hamrick says, and “more individuals were in the labor force, either working or looking for work.”
More people joining the labor force can sometimes push the unemployment rate higher, but the opposite happened in the March. The labor force participation rate increased, and unemployment still fell.
Some of that might be due to the continuing rebound in the leisure and hospitality sector, which created 112,000 jobs in March, the most of any other sector. Leisure and hospitality has now seen 15 consecutive months of job growth exceeding 100,000, according to BLS.
The fact that the employment picture in the US continues to be so robust is good for workers, Hamrick says, despite historically high inflation, which is likely to continue into 2022.
“The state of the job market provides a solid underpinning for household finances,” he says. “These same households are being tested by inflation, which will flash further into the red with forthcoming readings.”
Nearly half the states have unemployment rates at or below pre-pandemic levels
At the state level, the jobs picture is more nuanced but still strong. Nearly half the states, most of which are rural or have smaller populations, have unemployment rates lower than they did before the pandemic.
Meanwhile, the unemployment rate in higher population states, like California and New York, continues to be at least a percentage point higher than it was pre-pandemic.
That discrepancy is likely because larger-population states simply have a lot more problems to from Covid than smaller ones do, says Mark Zandi, chief economist of Moody’s Analytics: “I think the states that lag, those that are struggling to get disease back to pre-pandemic levels, are those that have been hit hardest by the pandemic and the virus.”
That’s not only because of how hard they were hit by the various waves of the pandemic, including most recently by the omicron variant, but also because of broader economic challenges that preceded Covid-19, like the retirement of the baby boomers and low immigration levels , both of which slow economic growth, he says. Neither issue is easy to address.
“These are things that were going to happen anyway,” Zandi says, referring to recent immigration and retirement patterns. Still, coupled with the fact that large numbers of people who left larger-population states during the pandemic, these factors make it more challenging for those places to recover economically.
He uses New York as an example: “It’s going to take a long time for New York City to recover all the jobs it lost in the pandemic. It may not be until the end of this decade before that happens, maybe even longer.”
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