The June data for the US labor market confirmed the continued recovery. In fact, the rise in employment has accelerated significantly compared to May. Overall, however, only a good third of the losses in April were made up in May and June. The US labor market therefore still has a long way to go. It is very unlikely that the gains will continue at this pace, for it is clear that the first easing will have the greatest effect. Furthermore, the largest states by GDP in particular are lagging behind. Although the unemployment rates at the state level are only available for May, they show the uneven distribution of the recovery in the labor market. The graph shows the change in the unemployment rate from May to April by state and its GDP (size of bubbles). In addition, it is precisely the large states that have been hit particularly hard by the recent massive increase in COVID-19 cases. The second graph (next page) shows the change in daily new infections during the last 14 days in the states and the bubble size again shows nominal GDP.
These affected states will have to react in one way or another and there seems no way around tighter measures. Probably the first thing to be tried will be measures that do not do much damage to the economy. If this is not enough, the sectors that have been particularly affected so far and where job losses were the highest will probably be the first victims. This will delay the re-entry of these people into employment in the tourist/catering sectors, and unemployment rates will therefore fall more slowly.