Over the past six months, the U.S. economy has already recovered about half of the 22 million jobs lost during the coronavirus pandemic, but according to a new analysis, it could take years for the labor market to return to pre-crisis levels.
"Despite the rapid recovery in output and employment in the middle of 2020, we do not expect the economy to return to full employment until mid-2024 under our baseline of divided government and an effective vaccine," Goldman Sachs analysts wrote in a note to clients over the weekend.
While the economy has continued to add jobs, the pace has slowed markedly since May and June, when employers hired a combined 7.5 million workers, according to Labor Department data. Employers hired 638,000 jobs in October, the fourth consecutive month that job growth has cooled.
There are still about 10.1 million more Americans out of work than there were in February before the crisis began. The unemployment rate officially sits at 6.9%, the Labor Department said last week.
The Goldman analysts said they expect the jobless rate to drop to 6.6% by the end of this year and eventually fall to 3.9% by the end of 2024; while that's healthy, it's still above the pre-pandemic rate of 3.5%, a half-century low.
"It should be noted that the level of job creation is slowing, and taken together with initial jobless claims also bottoming out, suggests that the labor market’s recovery is starting to become more uneven," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. "Some of this may be due to the rise in COVID-19 cases and related containment measures."