U.S. Economy Adds 1.4 Million Jobs in August – Unemployment Down to 8.4 Percent

Strong job growth continues, with roughly half of the March and April job losses now reversed. 

• The U.S. economy added 1.4 million jobs in August, roughly in-line with market expectations.
• With the record-breaking job gains in May (+2.7 million), June (+4.8 million), July (+1.7 million), and now August (+1.4 million), the economy has added 10.6 million jobs over the past 4 months.
  • The May – August gains reverse roughly 5 in 10 of the jobs lost in March and April.
• Job gains were largest in retail trade (+249,000), professional and business services (+197,000), leisure and hospitality (+174,000), and education and health services (+147,000).
  • The manufacturing (+29,000) and construction sectors (+16,000) also saw job growth. Because the survey reference period was the pay period that includes August 12, these data reflect partial re-openings and shutdowns across States.

The unemployment rate plummets, far below market expectations.

• The unemployment rate in August plummeted 1.8 percentage points (p.p.) to 8.4 percent, beating market expectations of a 0.4 p.p. decline to 9.8 percent.
  • The August drop in the unemployment rate is the second largest decline since the series began in 1948. The largest decline on record of 2.2 p.p. was recorded in June.
  • Since the April peak, in just 4 months the unemployment rate has decreased 6.3 p.p. In contrast, it took nearly 9 years following the Great Recession peak in October 2009 for the unemployment rate to fall 6.3 p.p.
  • For the first time since the pandemic-peak in April, the unemployment rate has fallen below the peak in the Great Recession of 10.0 percent.
• African American employment has increased by 1.3 million (+7.9%) from the recent April low. In August, it increased 367,000 following strong gains in May (+283,000), June (+404,000), and July (+234,000).
  • The unemployment rate for African Americans decreased 1.6 p.p., for Hispanics by 2.4 p.p., for Asian Americans by 1.3 p.p., and for those with less than a high school diploma by 2.8 p.p.
  • The unemployment rate for adult women (age 20+) also fell by 2.1 p.p., the second largest decline recorded since the series began following the June decline of 2.7 p.p.
• The labor force participation rate rose 0.3 p.p. to 61.7 percent, and the employment-to-population ratio increased 0.4 p.p. to 56.5 percent in August.
• Reentrants to the labor force who are unemployed remained elevated at 2.1 million in August, 310,000 above their August 2019 level, showing workers’ confidence in their ability to find a job.

Under the Trump Administration, America is witnessing the fastest labor market recovery from any economic crisis in history thus far.

• Job creation in May, June, July, and August has met or exceeded expectations.
  • In those 4 months, job creation beat market expectations by a combined 12.2 million.
• In just 4 months, the unemployment rate has plummeted to a rate BELOW what most forecasters had recently projected the rate to be at the end of 2020.
  • The CBO projected in July that at the end of 2020 the unemployment rate would still be at 10.5 percent.
  • The FOMC in June projected the unemployment rate would be 9.3 percent at the end of 2020.
  • Similarly, the Blue Chip consensus forecast in August projected an unemployment rate of 9.3 percent at the end of 2020.