The U.S. Bureau of Economic Analysis (BEA) announced that its “advanced estimate” forReal Gross Domestic Product (GDP) increased at an annual rate of only 4.0 percent in the fourth quarter of 2020, reflecting both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. In the third quarter, real GDP increased 33.4 percent (on an annualized basis). Maybe just a coincidence, but the abrupt about-face on the “V” shape recovery coincides with the complete takeover of all policy elements of the federal government by the party that has argued for sustained or renewed shutdowns. Although growth continued in the fourth quarter, the pace wasn’t strong enough to complete a recovery “on the whole” for the year, leaving the GDP in negative territory at minus 3.5 percent for 2020.

Elections have consequences, and it appears the results of November 3^rd have already impacted markets, especially with the number of states returning to aggressive shutdowns. Job hiring collapsed in December declining 140,000 jobs according the latest Labor Department figures. Non-seasonally adjusted construction unemployment jumped to 9.6 percent [up 2.3 percentage points over November, while being nearly twice or up 4.6 percentage points from a year ago in December 2019 when it stood at 5.0%].  Notwithstanding, construction added 51,000 jobs in December, but employment in the industry is still 226,000 below its February peak level.  Specifically, employment rose in residential specialty trade contractors (+14,000) and residential building (+9,000), two industry segments that have gained back the jobs lost in March and April. In December, construction employment also increased in nonresidential specialty trade contractors (+18,000) and in heavy and civil engineering construction (+15,000).

The overall unemployment figure stayed at 6.7 percent.  (“Unemployed persons” also remained at 10.7 million per the government count). The “labor force participation” was flat at 61.5 percent. [NOTE: The “labor force participation” rate “typically” works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  The “employment to population ratio” was also constant at 57.3 percent.  Average hourly earnings for employees increased slightly to $25.09, fairly high due to the fact lower wage earners are being disproportionally impacted by the renewed partial government mandated shutdowns. 

SEE Workforce Statistics Chart here.

The workforce rebound in November slowed adding just 245,000 jobs according the latest Labor Department figures. Non-seasonally adjusted construction saw a slight winter up-tick in unemployment to 7.3 percent [an increase of 0.5 percentage points from October, while being up 3.9 percentage points from a year ago in November 2019 when it stood at 4.4%].  Generally, construction gained 27,000 jobs in November, but employment is still 279,000 below its pre-COVID February level. In November, employment rose in residential specialty trade contractors (+14,000) and in heavy and civil engineering construction (+10,000).  

The overall unemployment figure dropped to 6.7 percent, a reduction of (0.2) percent in a month, while tumbling 8.0 percentage points since its peak in April.  (“Unemployed persons” also fell 400K to a total of 10.7 million per the government count). The “labor force participation” rate decreased to 61.5 percent. [NOTE: The “labor force participation” rate “typically” works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  The “employment to population ratio” also fell to 57.3 percent.  Average hourly earnings for employees was reported roughly constant at $24.87, fairly high due to the fact lower wage earners are being disproportionally impacted by the renewed partial government mandated shutdowns. 

See Workforce Statistics Chart for details.

The workforce rebound continued in October with jobs expanding by 906,000 thousand according the latest Labor Department figures. Construction non-seasonally adjusted levels also improved with unemployment decreasing to 6.8 percent [a drop of 0.3 percentage points from September, but still up 2.8 percentage points from a year ago in October 2019 when it stood at 4.0%].  Construction added 84,000 jobs in October: Specialty trade contractors added jobs, both in the nonresidential (+28,000) and residential (+18,000) components. Employment also rose in heavy and civil engineering construction and in construction of buildings (+19,000 each). Construction has added 789,000 jobs in the last 6 months, but employment is down by 294,000 since February.

The overall unemployment figure dropped to 6.9 percent, a reduction of a full (1.0) percent in just one month, while tumbling 7.8 percent in six months since its peak in April.  (“Unemployed persons” also fell 1.5 million to a total of 11.1 million per the government count). The “labor force participation” rate increase to 61.7 percent. [NOTE: The “labor force participation” rate “typically” works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  The “employment to population ratio” rose 0.8 points to 57.4 percent.  Average hourly earnings for employees was reported roughly constant at $24.81, fairly high due mostly to the fact lower wage earners remain out of work in market segments still in partial government mandated shutdowns. 

SEE Workforce Statistics Chart

Real gross domestic product (GDP) increased at an unprecedented annual rate of 33.1 percent in the third quarter of 2020 (or 8.275% on a quarterly basis), as efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19, have had a record setting impact. In the second quarter of 2020, real GDP decreased 31.4 percent (or 7.85% on a quarterly basis) . The third-quarter increase in real GDP reflected increases in consumer spending, inventory investment, exports, business investment, and housing investment that were partially offset by a decrease in government spending. Imports, a subtraction in the calculation of GDP, increased.

(See, table for GDP percentage comparisons over the past 12 months).

In the face of continued shutdowns, the workforce rebound continued in September with jobs expanding by 661,000 thousand according the latest Labor Department figures. Construction non-seasonally adjusted levels also improved with unemployment decreasing to 7.1 percent [a drop of 0.5 percentage points from July, but still up 3.9 percentage points from a year ago in September 2019 when it stood at near “full employment” of only 3.2%].  Employment in the construction industry is approximately 394,000 below February 2020, with the increase of 26,000 in construction/specialty positions, and another 13,000 in the design professions in September alone.

The overall unemployment figure continued to recede from its record crest in April, slipping to 7.9 percent, a reduction of another half (0.5) percent in just one month.  (“Unemployed persons” also fell 1.0 million to a total of 12.6 million per the government count). The “labor force participation” rate slide down to 61.4 percent. [NOTE: The “labor force participation” rate “typically” works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  However, the “employment to population ratio” rose 0.1 points to 56.6 percent.  Average hourly earnings for employees was reported constant at $24.79, fairly high due mostly to the fact lower wage earners remain out of work in market segments still in partial shutdowns by government orders. 

SEE Workforce Statistics Chart

UPDATE!  The U.S. Bureau of Economic Analysis (BEA) has again revised it initial numbers for real gross domestic product (GDP).  According to the “third” estimate released by the BEA, the decrease was slightly less at 7.85 percent for the quarter (or 0.3 percentage point less severe than the “second” estimate released in August). By comparison, in the first quarter of 2020, real GDP decreased 5.0 percent.

The “V”-Shaped rebound continued in August with jobs expanding by 1.4 million according the latest Labor Department figures. Construction non-seasonally adjusted levels also improved with unemployment decreasing to 7.6 percent [a drop of 1.3 percentage points from July, now up 4.0 percentage points from a year ago in August 2019 when it stood at only 3.6%].  Employment in the construction industry is approximately 400,000 positions short of last August’s near full employment levels.

The overall unemployment figure continued to recede from its record crest in April, slipping to 8.4 percent, a healthy reduction of 1.8 percentage points in just one month.  (“Unemployed persons” also fell 2.7 million to a total of 13.6 million per the government count). The “labor force participation” rate ticked-up to 61.7 percent. [NOTE: The “labor force participation” rate “typically” works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  The “employment to population ratio” rose some 1.4 points to 56.5 percent.  Average hourly earnings for employees was reported at $24.81, fairly high due mostly to the fact lower wage earners remain out of work in market segments still in partial shutdowns by government orders. 

Workforce Statistics Chart

In a bit of good news, the U.S. Bureau of Economic Analysis (BEA) has issued the latest update to real Gross Domestic Product (GDP). According to the "second" more accurate estimate released by the Bureau, GDP decreased by 7.925 percent for the quarter, an improvement over the initial estimate released in July. (If the contraction stayed at this pace for 12 months, the annual rate would be 31.7 percent, an unreliable projection never used before the second quarter of 2020). The change was 1.2 percentage points better than the "advance" estimate that set the downturn at 9.125 percent. In the first quarter of 2020, real GDP decreased 5.0 percent. Profits decreased 11.1 percent at a quarterly rate in the second quarter after decreasing 12.0 percent in the first quarter.

The post-shutdown rebound continued in July, seeing jobs expand by 1.8 million according the latest Labor Department figures. Construction non-seasonally adjusted levels continued to improve with unemployment decreasing to 8.9 percent [a drop of 1.2 percent points from June, but still up 5.1 percentage points from a year ago in July 2019 when it stood at only 3.8%].  Overall, employment in the construction industry grew by 20,000 positions in July (for a combined rebound of 631,000 jobs for May, June, & July); leaving the industry approximately 445,000 positions short of pre-shutdown levels in February of 2020).

The overall unemployment figure continued to recede from its record crest in April, slipping to 10.2 percent, down 0.9 percentage points since June.  (“Unemployed persons” also fell 1.5 million to a total of 16.3 million per the government count). The “labor force participation” rate remained basically constant at 61.4 percent. [NOTE: The “labor force participation” rate works inversely to the overall unemployment figures. Meaning: as it deteriorates/gets worse or smaller, it actually is counted as improving unemployment (i.e., people leaving the workforce are no longer viewed/counted as unemployed by the DOL)].  Conversely, the “employment to population ratio” rose to 55.1 percent.  Average hourly earnings for employees remained at approximately $24.74 due mostly to the fact lower wage earners remain out of work in market segments still in partial shutdowns by government orders. 

SEE Workforce Statistics Chart