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September Jobs Report Shows Slowdown in Recovery

Job growth has slowed in recent months

Cumulative change in all jobs since September 2016


Jobs report shows a slowdown in the recovery.

Job growth slowed further in September, as fading government support and the failure to contain the coronavirus threatened to short-circuit the once-promising economic recovery.

Employers brought back 661,000 jobs in September, the Labor Department said Friday. That is down from 1.5 million in August, and far below the 4.8 million jobs added in June. The unemployment rate fell to 7.9 percent, in part because nearly 700,000 people left the labor force.

Unemployment rate

By Ella Koeze·Unemployment rates are seasonally adjusted.·Source: Bureau of Labor Statistics

The monthly report, the last before the presidential election, is the latest sign that the recovery is losing steam. Government data released on Thursday showed that personal income fell in August and that consumer spending grew more slowly as supplemental unemployment benefits expired. Companies including Disney, Allstate and two major airlines have recently announced large job cuts.

“It’s disturbing that we’re seeing such a dramatic slowdown in employment gains as we head into the fall,” said Diane Swonk, chief economist for the accounting firm Grant Thornton. “This is a red flag. We need aid now.”

Even with the recent slowdown, the economy has done better than many forecasters expected in the spring. It has regained just over half of the more than 22 million jobs lost in March and April, and the unemployment rate has fallen sharply since it reached a record high of nearly 15 percent in April.

But those early gains were largely a result of businesses’ reopening and bringing back workers. By now, most businesses that can reopen before a vaccine is widely available have done so. A growing number of businesses are deciding to make permanent job cuts, or to shut down. The number of people reporting they had lost their jobs permanently, as opposed to being on temporary furlough, rose in September.

“We got the easy ones first, and there are not a lot more of those to get,” said Dan North, chief economist for the credit insurance company Euler Hermes North America. “And in the meantime, we’re getting a lot of permanent job losses.”

Economists warn that permanent losses could worsen if Congress doesn’t provide more aid to households and businesses to replace the programs that expired over the summer. Prospects for a “Phase 4” spending package improved this week after appearing all but dead in September, but Democrats and Republicans in Washington have yet to reach a deal. If they don’t, the recovery could slow further in October, said Aneta Markowska, chief economist for the investment bank Jefferies.

“Everything depends on Phase 4 and whether we get that or not,” she said. “There’s no middle ground.”

Ben Casselman