The U.S. economy in the second quarter reached a heartening milestone: Gross domestic product, the chief measure of economic output, edged above its pre-COVID-19 peak.
Locally, the signs of recovery are evident too. The jobless rate is down sharply, employment is up and sales tax revenues are surging.
But here and around the country, the economy is not out of the woods yet. Supply bottlenecks and other dislocations resulting from the pandemic continue to hamper growth, and the swiftly spreading Delta variant looms darkly on the near horizon.
Nonetheless, the speed and strength of the recovery so far are remarkable, economic experts say. In fact, the nation’s GDP growth in the first half of 2021 nearly matched some forecasters’ estimates for the entire year.
The Commerce Department last Thursday said that GDP grew 1.6 percent in the second quarter, up from 1.5 percent in the first quarter. On an annualized basis, second-quarter growth was 6.5 percent.
In the same period a year ago, the economy suffered its worst three-month contraction on record.
Metropolitan GDP data for the period since the start of the pandemic are not available, but other metrics signal the positive direction of the Rochester-area economy.
Monroe County’s unemployment rate in June fell to 5.6 percent from 11.9 percent in June 2020, the latest monthly report from the state Labor Department shows.
The Rochester metro jobless rate was 5.3 percent, compared with 11.2 percent a year earlier.
Statewide, the June unemployment rate was 7.3 percent, versus 14.8 percent a year ago; nationwide, the rate was 6.1 percent, down from 11.2 percent in June 2020.
The Labor Department calculates local area unemployment rates in part using the results of the Current Population Survey, which contacts approximately 3,100 households in New York each month. The data are preliminary.
Monroe County’s unemployment rate during the pandemic peaked in April 2020—when New York’s lockdown orders were in full force—at 15 percent. The Rochester metro rate that month—14.9 percent—also was the highest since the start of the COVID-19 outbreak.
The county and metro jobless rates have been on a roller-coaster ride during the pandemic, generally paralleling the infection trendlines, but have remained elevated compared with pre-COVID rates.
That remains true. The metro jobless rate of 5.3 percent in June, while less than half the rate a year earlier, still is considerably higher than 3.9 percent in June 2019. In Monroe County, June’s 5.6 percent rate compares with 4 percent two years earlier.
The same story is told by the latest employment data. The June numbers remain low compared with June 2019 levels, but they show dramatic improvement from a year ago.
In the Labor Department’s release on nonfarm jobs in June (not seasonally adjusted), the Rochester metro area gained 36,900 jobs, a 7.8 percent increase, totaling 509,400 versus 472,500 a year ago. In June 2019, the area had 544,600 nonfarm jobs.
The growth, while strong, slightly trailed New York as a whole. Statewide, nonfarm employment increased 8.3 percent, fueled by a whopping 46.5 percent jump in leisure and hospitality jobs.
The Rochester area added private-sector jobs at a faster clip, adding 34,400 or 8.6 percent.
When the pandemic struck, sales tax revenues took a direct hit. Monroe County’s sales tax collections were down approximately 30 percent at the peak of the lockdown and remained off nearly 14 percent year-over-year in July 2020, after many restrictions had been lifted. That trend continued until this spring, when a rebound began.
The latest data from state Comptroller Thomas DiNapoli, released July 23, show a dramatic second-quarter turnaround. In the Finger Lakes region, local sales tax collections jumped 45.8 percent. Monroe County posted an identical increase, while Ontario County boasted a 55.2 percent increase.
Statewide, sales tax collections were 49.2 percent higher than a year ago and even surpassed collections reported during the second quarter of 2019, before the onset of the pandemic, DiNapoli noted.
One challenge moving forward will be broadening the case of the recovery. Job losses during the pandemic have been higher among lower-wage workers, research shows. A shrinking labor force and a half is evidence that many people have given up looking for work.
The paramount concern today, however, is the Delta variant and the surge in COVID infections. Since the July 4th holiday, the seven-day average of new daily cases nationwide has soared from around 11,000 to more than 70,000. In the same period, Monroe County’s seven-day rolling average of positive COVID tests increased from 0.6 percent to 2.4 percent.
On Friday, an internal Centers for Disease Control and Prevention document that shows mounting concern about the Delta variant became public. It says Delta causes more severe illness than earlier variants and breakthrough infections may be as transmissible as unvaccinated cases. Further, Delta is highly contagious—similar to chickenpox and more transmissible than the common cold, seasonal and 1918 flu, Ebola, smallpox, MERS and SARS.
The Delta surge comes as key pandemic relief measures such as extended unemployment insurance benefits are nearing an end, raising the economic stakes. Will the economy’s strong momentum be enough to keep it on track?
Paul Ericson is Rochester Beacon executive editor.