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We’re Officially Living Through a Drunken-Square-Root Recovery

U.S. job growth slowed in July, the government reported on Friday, as employers officially added 1.8 million workers to their payrolls, down from 4.8 million in June and 2.7 million May. The tally ever-so-slightly beat out economists’ expectations after a month during which many states forced businesses to shut back down as coronavirus infections spiked, and claims for unemployment insurance claims remained stubbornly, historically high. But while the figures are a bit stronger than some anticipated, the basic story seems to be that the recovery the White House has been counting on is now slackening off a bit.

The labor market is probably a bit weaker than the official numbers suggest. The unemployment rate fell to 10.2 percent, for instance, but in reality might be a percentage point higher, due to a misclassification issue that’s been dogging the government’s survey for months now. The report showed that schools added 215,000 employees, but that may have been inflated due to a seasonaladjustment issue. (Basically, districts let their summer staff go earlier than usual this year, due to the virus, leading to fewer layoffs in July than we typically see. That decline in layoffs shows up as an increase in hiring on the report, via the magic of seasonal adjustments.)

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