Boca Raton, FL – NCCI recently released its Quarterly Economics Briefing – Q1 2021 – The COVID-19 Recession: Economic Recovery Is Looking Up (If COVID Stays Down).
This issue of the QEB surveys recent developments related to employment and wages and considers the risk to the emerging economic recovery from a possible fourth COVID surge.
Key Themes and Takeaways
Strong employment growth in February and March, plus declining coronavirus case rates and increasing vaccinations, point to an accelerating pace of economic recovery in 2021.
The March national employment gap is down to –5.4%, a shortfall of 7 million jobs relative to seasonally expected employment levels. Lost jobs remain concentrated in service sectors, especially Leisure and Hospitality. Construction and Manufacturing are recovering strongly, but both sectors face material shortages and supply chain bottlenecks.
Unadjusted average weekly wages rose by more than 7% in 2020, in large measure because COVID-related job losses are concentrated among low-wage workers. Adjusting for the effect of COVID-related job losses on the wage distribution, average weekly wages rose by 3% in 2020 among workers who remained employed.
Economic impact payments from two new federal stimulus programs enacted in December and March were distributed to households during the first quarter. Transfer payments have kept national household disposable income and savings above pre-pandemic 2019 levels. Strong household balance sheets provide wherewithal to drive a rapid rebound in discretionary consumption spending in 2021.
About 30% of the United States population received at least one vaccine dose by the end of March, and vaccination rates are currently on the order of 3 million people per day. New coronavirus cases in March were down to about one-third of January’s rate. However, several states reported increases in cases and hospitalizations in late March attributed to a new and more contagious variant of the coronavirus.
Job losses from a new COVID surge, if it develops, may be modest—like those during last winter’s surge, but much lower than in two previous virus surges in spring and summer 2020.