U.S. economy rises as COVID-19 cases drop
WASHINGTON — U.S. hiring accelerated more quickly than expected last month, evidence that a year after the pandemic took hold, the economy is strengthening as virus cases drop and vaccinations ramp up.
A government report Friday showed that employers added a robust 379,000 jobs in February, driven by a sharp increase at beleaguered restaurants and bars. That suggests Americans are starting to venture out and spend more as progress is made against the coronavirus and states relax business restrictions.
The February gain marked a sharp pickup from the 166,000 jobs that were added in January and the loss of 306,000 in December. Yet it represents just a fraction of the roughly 9.5 million that the economy must regain to get back to where it was before the crisis.
Unemployment fell from
6.3 percent to 6.2 percent, the Labor Department said. That is down dramatically from 14.8 percent last April, just after the virus erupted in the United States. But it’s well above the pre-pandemic rate of 3.5 percent.
“The recovery really has some legs, some momentum now,” said Odeta Kushi, deputy chief economist at First American Financial Corp.
Stocks see-sawed through the day but ended sharply higher, with the Dow Jones Industrial Average rising 572 points, or about 1.9 percent, and the S&P 500 moving up nearly 2 percent.
In suggesting the economy is on the mend, the report could complicate President Joe Biden’s struggle to push through his $1.9 trillion COVID-19 relief package, which passed the House and is before the Senate.
It would provide, among other things, $1,400 checks to most adults, hundreds more in weekly unemployment benefits and another round of aid to small businesses at a time when many Americans have seen their income shrivel and have fallen behind on rent, mortgages and other bills.
Biden said Friday that previous government aid had contributed to February’s job gains, and he insisted the new package is needed to help keep the recovery going.
“Without a rescue plan, the gains are going to slow,” he said. “We can’t afford one step forward and two steps backward.”
About 4 million people who have lost their jobs have stopped looking for work and so are not classified as unemployed. If they were included, along with a separate group that was misclassified as working, the unemployment rate would be 9.3 percent, according to Oxford Economics.
Still, economists are increasingly optimistic that hiring will accelerate in the coming months as Americans seize the opportunity to once again travel, shop, attend sporting events, go to the movies and eat at restaurants.
Households as a whole have accumulated a huge pile of savings as Americans slashed their spending. Much of that is expected to be spent once people feel more comfortable about going out.
Last month’s job growth was driven by a steady recovery of bars, restaurants and hotels. Bars and restaurants, in particular, snapped back, adding 286,000 jobs as business restrictions eased in California and other states. This week, Texas joined some other states in announcing it will fully reopen its economy.