Everything is hyper-politicized these days, so even the surprisingly strong U.S. economic recovery is being dismissed as a mirage. The truth is that growth is continuing, and even the labor market for lower-income workers is reviving, though it has become increasingly bifurcated between states that reopened sooner and those that maintained longer lockdowns.

The latest good news was Thursday’s report that continuing jobless claims for the week of Oct. 10 declined by nearly one million to 8.37 million, and by 3.6 million in the last three weeks. This is a more important metric than new claims since it reflects layoffs and new hires. Continuing claims in the past three weeks have fallen twice as fast as they did from June through August.

This means workers who are being laid off now are finding jobs more quickly than they did this summer. They may also now have more of an incentive to do so since federal enhanced unemployment benefits are expiring. Some additional federal benefits may have been necessary this spring when most businesses were forced to shut down.

But in August the layoff rate hit the lowest on record, according to the Bureau of Labor Statistics’ (BLS) latest Jolts report. In July and August, layoffs were fewer than during the same months last year. This was even true for food and accommodation businesses, which discharged 364,000 workers in July and August compared to 420,000 last year.


reported this week that more new restaurants opened in September than in 2018, 2017 and 2016.

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Employers are also raising wages. Third-quarter median weekly earnings increased 8.2% year-over-year and 9.2% for the bottom 25% of workers, according to BLS. Median weekly earnings rose 3.5% for construction workers, 4.6% for those in production occupations, 11.8% for Hispanics and 9.3% for blacks. The loss of lower-income jobs may have helped to bump up average earnings. But as a point of contrast, median weekly earnings were flat for lower-income workers in the year after the last recession ended.

Banks noted in third-quarter earnings reports last week that loan defaults have been lower than expected, and the average consumer credit score is the highest since 2005. Many Americans used government stimulus checks to repay debt, but they haven’t reduced spending once government transfer payments faded as some economists predicted. The savings rate in August was a very high 14%.

Last week’s government retail report showed spending in September was up 5.4% year-over-year, including 10.5% for food and groceries, 10.9% for motor vehicles, 19.1% in building and home furnishing, and 23.8% for online retailers. Americans are still spending but on different things. These shifts are increasing the demand for workers in industries like warehousing, distribution and construction.

Home construction is booming, with builders reporting shortages of materials and workers. The Atlanta Federal Reserve estimates the economy grew 35.3% in the third quarter, and another 5% or more is possible in the fourth. Democratic economists want to ignore or dismiss this progress for obvious political reasons, but that doesn’t change the reality.


The story that the media haven’t told is that states that have maintained longer and stricter business restrictions have been slower to recover. The unemployment rate in September was 12.6% in Nevada, 11% in California, 10.5% in Rhode Island, 10.2% in Illinois, and 9.7% in New York compared to 6.7% in Arizona, 6.4% in Georgia, 5.4% in Wisconsin and 5% in Utah.

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New York added 100,000 jobs last month as Gov. Andrew Cuomo finally let dine-in restaurants and gyms in New York City reopen at limited capacity. But 363,000 workers also dropped out of the labor force, which was the biggest driver in the state’s 2.8-point decline in unemployment. New Jersey’s unemployment rate fell to 6.7% from 11.1%, but that’s also largely because 229,000 workers left the labor force. The main cause of what Joe Biden calls the “K-shaped recovery” are Democratic governors that shut down their economies.

By contrast, Arizona’s labor force grew by 151,000, and Wisconsin’s by 82,000. School closures and hybrid instruction schedules in some states may be causing women to stay home. But workers in stricter lockdown states who have been unemployed for many months may also now be dropping out of the workforce because they are discouraged.

The U.S. economy overall has plenty of momentum, and the biggest risk isn’t a reduction in government relief, as the liberal intelligentsia proclaim. It’s political leaders who refuse to reopen schools and businesses, no matter the virus risks, and threaten major new burdens on hiring and investment.

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