The local economy’s strong finish in 2021

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The Rochester-area economy finished 2021 on a high note, once again outperforming the statewide averages for job growth and unemployment. 

In fact, the regional jobless rate in December was lower than it has been in any month since 1990, but that’s at least partly because the number of jobs and people in the civilian labor force have shrunk. 

Overall, the latest numbers show that the metro economy has regained much of the ground lost when COVID-19 pandemic arrived in spring 2020, but it has not fully recovered the jobs it had before the pandemic struck.

The state Labor Department’s data on nonfarm employment in December, compared with a year earlier, show the Rochester metro region with a gain of 32,100 jobs, or 6.5 percent. The increase statewide was 4.4 percent. Since September, when the metro economy added 22,400 nonfarm jobs, or 4.6 percent, the rate of gain has increased steadily: October’s rate was 5.1 percent and November reached 5.3 percent. The numbers are not seasonally adjusted.

The Rochester region also outpaced New York in private-sector job growth in December, up 7.3 percent compared with 5.2 percent statewide. As with nonfarm employment, the rate of increase has gained steam in recent months: September (5.3 percent), October (5.6 percent) and November (5.9 percent).

Each monthly job gain puts the local economy closer to where it was prior to the pandemic, but a gap remains. Total nonfarm employment reached 526,000 in December, up from 441,700 in April 2020, when the COVID lockdown was in full force. However, there still are nearly 19,000 fewer jobs than the 544,800 recorded in December 2019.

The story is similar with private-sector employment. It reached 444,767 in December, versus 369,733 in April 2020, but it’s still down compared with 458,830 in December 2019.

Jobless rate hits low

The metro unemployment rate in December was 2.9 percent, compared with 6.7 percent a year earlier. In November, the rate was 3.7 percent, versus 6 percent in November 2020.

According to data from the U.S. Bureau of Labor Statistics, last month marked the first time in more than 30 years that the Rochester-area jobless rate has fallen below 3 percent. However, a long-term decline in the number of people in the labor force—with a large, short-term drop when the pandemic began—is a big factor in the current tight job market.

Monroe County’s jobless rate in December was 3 percent, versus from 7.1 percent in December 2020. Elsewhere in the Rochester region, the December rates were Livingston County, 2.6 percent; Ontario County, 2.6 percent; Orleans County, 3.1 percent; Wayne County, 2.7 percent; and Yates County, 2.4 percent.

Statewide, the December rate was 5 percent; nationwide, it was 3.7 percent.

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 and are not seasonally adjusted.

The outlook for 2022

The U.S. economy grew 5.5 percent in 2021, the strongest annual output in nearly 40 years. That compares with a decline of 2.3 percent in 2020, the first year of the pandemic and the first economic contraction since the housing and financial crash in 2008.

Helping to fuel the robust growth last year was a flood of pandemic-relief funds sent by Washington to U.S. households, on top of historically low borrowing costs. In addition, wages and salaries jumped 4.5 percent last year, the federal government reported today. That’s the biggest annual increase since the BLS started collecting the data two decades ago.

Now, though, much of the stimulus money has been spent. And with inflation higher than it has been since the early 1980s, the Federal Reserve has signaled that higher interest rates lie ahead. (As the New York Times reported, inflation-adjusted growth nationwide still lags its pre-COVID trends.) Both factors could cause growth to slow.

What’s more, the U.S.—like the rest of the world—is still gripped by COVID. The regional economy has suffered fewer disruptions than the nation as a whole from the Delta and Omicron variants and resulting supply-chain disruptions, and new daily-case numbers now are declining. Nevertheless, the pandemic could still alter the economy’s course in coming months.

Paul Ericson is Rochester Beacon executive editor.

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