The Weekly Briefing - November 9th, 2020

Unpacking the October Employment Report

The October jobs reports confirms that the recovery has entered a phase of more modest growth after some portions of the economy snapped back quickly this summer. The economy netted 638,000 new jobs last month, slightly below September’s total of 672,000. The end of temporary Census jobs somewhat tamped down gains last month, but October’s figure nevertheless continues a decelerating trend observed since July. Nonfarm payrolls stand 10.1 million lower than in February before the U.S. economy experienced a significant shock due to restrictions on business and personal activities. If October’s pace of growth continues, the U.S. economy would take 16 more months to reach the previous employment peak. Further, the number of permanently lost jobs stands at 3.7 million, and a recovery to pre-pandemic levels would require outsized growth in other areas to make up the difference. Some businesses appear hesitant to commit to higher staffing levels and instead are hedging their bets as temporary employment accounted for approximately one-sixth of net job increases last month. Tomorrow’s JOLTS report will provide addition insight on recent job hiring trends. Robust job growth will be crucial to pulling the unemployed back into the active workforce before jobless benefits expire. Last month, the number of long-term unemployed (>26 weeks) spiked 50.0% to 3.6 million. At the same time, claims for Pandemic Unemployment Assistance (PUA), which temporarily covers the self-employed and contractors, dropped sharply by one million, suggesting some workers have reached the end of benefit eligibility. In total, 20.4 million people continue to receive conventional unemployment insurance (UI), PUA, or Pandemic Emergency Unemployment Compensation (PEUC). Weekly Unemployment Claims Continued Distress in Leisure & Hospitality Representative of the K-Shaped Recovery

Several months into the pandemic, weak performance continues in the leisure and hospitality sectors. As these sectors struggle, it is likely to slow the overall pace of economic recovery, especially in areas dependent on travel and tourism spending. While overall U.S. employment has declined 6.6% since February, leisure and hospitality employment levels are down 20.7%. The sectors have yet to recover 3.5 million jobs lost and at the peak of the economic shock accounted for more than one-third of the overall U.S. employment decline. A rise in new coronavirus cases in recent weeks appears to be weighing on hotel stays. After hovering just below 50.0% since early August, the nationwide hotel occupancy rate declined during the past two weeks to 44.4%, according to STR. And the average daily rate (ADR) and revenue per available room (RevPAR) remain down 27.4% YOY and 48.4% YOY respectively. Checkpoint travel numbers similarly point to muted travel activity as public health measures continue to deter leisure and business travelers alike. The Transportation Security Administration (TSA) recently screened one million people in a single day for the first time since March, but passenger volume during the first week of November totaled only one-third of YOY figures. TSA Daily Checkpoint Screenings: 2019 vs. 2020 Daily Mobility Data Suggests Many Americans Have Not Yet Returned to Regular Routines

Daily travel activity outside the home remains muted even though many states and localities lifted stay-at-home restrictions several months ago. Continued low mobility activity after the expiration of many restrictions suggests that concerns about personal health continue to dissuade many Americans from resuming regular activities. At the national level, the number of daily trips outside the home was down 29.3% YOY as of mid-October, according to data provided by the Bureau of Transportation Statistics (BTS). Trip counts dropped rapidly during March and then improved somewhat during April and May. But since then, the number of daily trips has largely plateaued. Per capita daily trip activity is lowest in the Western U.S. Some of the states in the region, such as Washington, Oregon, and California, have experienced less dramatic increases in new virus case counts during the past several weeks compared to the U.S. overall. Per Capita Daily Trips by County (Map) & U.S. Daily Trips (Chart)

Disclosures and Disclaimers

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