State of the National Economy 2022

Measuring the job shortfall since February 2020: Actual and counterfactual employment, January 2019–August 2022

Actual nonfarm payroll employment Employment if it had continued growing at the pre-recession level Employment if it had grown with population growth since February 2020
Sep-2019 151.2
Oct-2019 151.3
Nov-2019 151.6
Dec-2019 151.8
Jan-2020 152.1
Feb-2020 152.5 152.5 152.5
Mar-2020 151.0 152.7 152.6
Apr-2020 130.5 152.9 152.7
May-2020 133.2 153.1 152.8
Jun-2020 137.7 153.3 152.9
Jul-2020 139.0 153.5 152.9
Aug-2020 140.7 153.7 153.0
Sep-2020 141.6 153.9 153.1
Oct-2020 142.3 154.1 153.2
Nov-2020 142.6 154.3 153.3
Dec-2020 142.5 154.5 153.4
Jan-2021 143.0 154.7 153.5
Feb-2021 143.7 154.9 153.6
Mar-2021 144.4 155.1 153.7
Apr-2021 144.7 155.3 153.7
May-2021 145.1 155.5 153.8
Jun-2021 145.7 155.7 153.9
Jul-2021 146.4 155.9 154.0
Aug-2021 146.9 156.1 154.1
Sep-2021 147.3 156.3 154.2
Oct-2021 148.0 156.5 154.3
Nov-2021 148.7 156.7 154.4
Dec-2021 149.2 156.9 154.4
Jan-2022 149.7 157.1 154.5
Feb-2022 150.5 157.3 154.6
Mar-2022 150.9 157.5 154.7
Apr-2022 151.2 157.7 154.8
May-2022 151.6 157.9 154.9
Jun-2022 151.9 158.1 155.0
Jul-2022 152.4 158.3 155.1
Aug-2022 152.7 158.5 155.2  
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Source: EPI analysis of Bureau of Labor Statistics Current Population Survey public data series.

Employment change by industry (thousands) between July and August 2022

Industry Employment change, one month
Education and health services 68
Professional and business services 68
Retail services 44
Leisure and hospitality 31
Manufacturing 22
Financial activities 17
Construction 16
Wholesale trade 15
Government 7
Other services 7
Information 7
Mining and logging 7
Transportation and warehousing 5
Utilities 1
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Source: Bureau of Labor Statistics' (BLS) Current Employment Statistics, Establishment Survey (CES) public data series.

Unemployment rates for Black, Hispanic, and white workers, January 2019–May 2022

Month Black White Hispanic
2019-01-01 6.9% 3.5% 4.7%
2019-02-01 7.0% 3.2% 4.3%
2019-03-01 6.5% 3.3% 4.5%
2019-04-01 6.6% 3.2% 4.1%
2019-05-01 6.1% 3.3% 4.2%
2019-06-01 6.0% 3.3% 4.3%
2019-07-01 5.6% 3.3% 4.4%
2019-08-01 5.2% 3.4% 4.2%
2019-09-01 5.4% 3.2% 4.0%
2019-10-01 5.6% 3.3% 4.2%
2019-11-01 5.7% 3.3% 4.3%
2019-12-01 6.2% 3.1% 4.3%
2020-01-01 6.1% 3.0% 4.3%
2020-02-01 6.0% 3.0% 4.4%
2020-03-01 6.8% 3.9% 5.9%
2020-04-01 16.7% 14.1% 18.8%
2020-05-01 16.7% 12.3% 17.6%
2020-06-01 15.3% 10.1% 14.5%
2020-07-01 14.4% 9.2% 12.8%
2020-08-01 12.8% 7.4% 10.6%
2020-09-01 12.0% 7.0% 10.4%
2020-10-01 10.8% 6.0% 8.9%
2020-11-01 10.3% 5.9% 8.6%
2020-12-01 9.9% 6.0% 9.4%
2021-01-01 9.2% 5.7% 8.6%
2021-02-01 9.9% 5.6% 8.4%
2021-03-01 9.6% 5.4% 7.7%
2021-04-01 9.7% 5.3% 7.7%
2021-05-01 9.1% 5.1% 7.1%
2021-06-01 9.2% 5.2% 7.2%
2021-07-01 8.2% 4.8% 6.4%
2021-08-01 8.7% 4.5% 6.2%
2021-09-01 7.8% 4.2% 6.1%
2021-10-01 7.8% 3.9% 5.7%
2021-11-01 6.5% 3.7% 5.2%
2021-12-01 7.1% 3.2% 4.9%
2022-01-01 6.9% 3.4% 4.9%
2022-02-01 6.6% 3.3% 4.4%
2022-03-01 6.2% 3.2% 4.2%
2022-04-01 5.9% 3.2% 4.1%
2022-05-01 6.2% 3.2% 4.3%
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Source: Seasonally adjusted Federal Reserve Economic Data.

Labor force participation rates for Black, Hispanic, and white workers, January 2019–May 2022

Month Black White Hispanic
2019-01-01 63.0% 63.0% 67.2%
2019-02-01 62.6% 63.0% 66.5%
2019-03-01 62.0% 63.0% 66.8%
2019-04-01 62.4% 62.8% 66.0%
2019-05-01 62.5% 62.9% 66.3%
2019-06-01 61.8% 62.9% 66.4%
2019-07-01 62.6% 63.0% 66.5%
2019-08-01 62.1% 63.1% 66.7%
2019-09-01 62.4% 63.2% 67.1%
2019-10-01 62.4% 63.2% 67.2%
2019-11-01 62.2% 63.2% 67.3%
2019-12-01 63.1% 63.2% 67.1%
2020-01-01 62.8% 63.3% 67.8%
2020-02-01 63.2% 63.3% 68.0%
2020-03-01 61.8% 62.6% 66.9%
2020-04-01 58.5% 60.3% 63.3%
2020-05-01 59.7% 61.0% 64.2%
2020-06-01 59.9% 61.6% 65.5%
2020-07-01 60.2% 61.5% 64.7%
2020-08-01 60.1% 61.8% 65.4%
2020-09-01 59.8% 61.6% 64.9%
2020-10-01 60.2% 61.8% 65.6%
2020-11-01 60.4% 61.5% 65.4%
2020-12-01 59.9% 61.6% 65.3%
2021-01-01 60.3% 61.4% 65.0%
2021-02-01 60.1% 61.4% 65.4%
2021-03-01 60.7% 61.4% 65.4%
2021-04-01 61.2% 61.5% 65.2%
2021-05-01 61.0% 61.4% 65.1%
2021-06-01 61.5% 61.4% 65.4%
2021-07-01 60.8% 61.6% 65.6%
2021-08-01 61.5% 61.5% 65.5%
2021-09-01 61.3% 61.5% 65.6%
2021-10-01 61.0% 61.5% 65.7%
2021-11-01 60.7% 61.7% 66.3%
2021-12-01 60.8% 61.7% 66.0%
2022-01-01 62.0% 62.0% 66.4%
2022-02-01 62.2% 62.2% 66.6%
2022-03-01 62.1% 62.3% 66.4%
2022-04-01 62.3% 61.9% 66.1%
2022-05-01 63.0% 61.9% 66.5%
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Source: Seasonally adjusted Federal Reserve Economic Data.

Compositional shifts distort normal measures of wage growth: Median and mean changes in wages, normal and inverse probability (composition-adjusted) weights, 2019–2020 and 2020–2021

Mean (normal weight) Mean (inverse probability weight) Median (normal weight) Median (inverse probability weight)
2019–2020 0 7.4% 4.4% 0 6.6% 2.6%
2020–2021 0 -2.7% -1.7% 0 -3.4% -1.6%
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Source: Authors' analysis of Current Population Survey basic monthly microdata, EPI Current Population Survey Extracts, Version 1.0.27 (2022), https://microdata.epi.org.

Wage growth fell at higher wage levels in 2021: Real annual composition-adjusted wage growth by percentile, alternative and calendar years, 2020–2021

Percentile Alternative year Calendar year
5th 0.4% 1.1%
10th 0.7% 1.1%
15th 0.6% 1.0%
20th 0.3% 0.6%
25th 0.0% 0.3%
30th -0.5% -0.1%
35th -0.9% -0.5%
40th -1.4% -0.9%
45th -1.8% -1.2%
50th -2.1% -1.5%
55th -2.4% -1.7%
60th -2.5% -1.8%
65th -2.7% -1.9%
70th -2.8% -2.0%
75th -2.9% -2.2%
80th -3.0% -2.3%
85th -3.1% -2.4%
90th -3.2% -2.7%

 

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Source: Authors’ analysis of Current Population Survey Outgoing Rotation Group microdata, EPI Current Population Survey Extracts, Version 1.0.27 (2022), https://microdata.epi.org.

Wage growth has stabilized as the labor market returns to pre-pandemic composition: Year-over-year wage changes, alternative measures, 2018–2022

 

Year-over-year Employment cost index (ECI) Hourly compensation Average hourly earning (all employees) Average hourly earning (production and non-supervisory employees) Composition-adjusted average hourly earnings (all employees)
2019-03-01 3.0% 4.3% 3.4% 3.5% 3.4%
2019-06-01 3.0% 4.2% 3.3% 3.5% 3.3%
2019-09-01 3.0% 3.0% 3.3% 3.7% 3.3%
2019-12-01 3.0% 3.9% 3.2% 3.5% 3.2%
2020-03-01 3.3% 3.7% 3.2% 3.5% 3.1%
2020-06-01 2.9% 8.7% 6.6% 6.7% 4.9%
2020-09-01 2.6% 7.3% 4.9% 4.9% 4.0%
2020-12-01 2.8% 8.6% 4.9% 5.0% 4.0%
2021-03-01 3.0% 6.2% 5.0% 5.1% 4.2%
2021-06-01 3.6% 3.4% 2.2% 2.8% 3.4%
2021-09-01 4.6% 6.3% 4.5% 5.4% 4.9%
2021-12-01 4.9% 5.5% 5.2% 6.4% 5.7%
2022-03-01 5.0% 6.5% 5.4% 6.7% 5.8%
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Notes: Our composition-adjusted average hourly earnings for all workers holds constant February 2020 industry mix by weighting by sector-level average weekly hours in the months that follow.

Source: EPI analysis of Bureau of Labor Statistics' (BLS) Current Employment Statistics, Employment Cost Index, and Productivity and Costs public data series.

Quarterly wage growth shows no sign of accelerating this year: Annualized quarterly wage changes, alternative measures, 2018–2022

 

Quarter Employment cost index (ECI) Hourly compensation Average hourly earnings (all employees) Average hourly earnings (production and non-supervisory employees) Composition-adjusted average hourly earnings (all employees)
2019-03-01 2.7% 9.3% 3.7% 4.0% 3.7%
2019-06-01 3.0% 0.8% 2.3% 2.9% 2.3%
2019-09-01 3.6% 0.4% 3.6% 3.9% 3.6%
2019-12-01 2.6% 5.2% 3.1% 3.2% 3.1%
2020-03-01 4.1% 8.7% 4.0% 4.2% 3.4%
2020-06-01 1.4% 21.6% 16.3% 16.2% 9.6%
2020-09-01 2.3% -4.7% -3.0% -3.1% 0.1%
2020-12-01 3.4% 10.6% 3.2% 3.4% 3.3%
2021-03-01 4.8% -0.6% 4.2% 4.6% 4.2%
2021-06-01 3.6% 9.2% 4.7% 6.4% 6.0%
2021-09-01 6.5% 6.3% 5.7% 7.2% 6.0%
2021-12-01 4.7% 7.4% 6.1% 7.3% 6.4%
2022-03-01 5.2% 3.2% 5.1% 6.0% 4.9%
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Notes: Our composition-adjusted average hourly earnings for all workers holds constant February 2020 industry mix by weighting by sector-level average weekly hours in the months that follow.

Source: EPI analysis of Bureau of Labor Statistics' (BLS) Current Employment Statistics, Employment Cost Index, and Productivity and Costs public data series.

Nominal wage growth has moderated in recent months: Nominal wage growth in average hourly earnings for all workers in three measures, year-over-year, annualized quarterly, and annualized monthly changes, January 2019—May 2022

Year-over-year change Annualized quarterly change Annualized monthly change
Jan-2019 3.3% 3.5% 1.8%
Feb-2019 3.6% 3.8% 4.4%
Mar-2019 3.5% 3.7% 4.4%
Apr-2019 3.3% 3.4% -0.9%
May-2019 3.3% 2.8% 3.1%
Jun-2019 3.4% 2.3% 3.9%
Jul-2019 3.4% 2.6% 3.9%
Aug-2019 3.4% 3.3% 4.4%
Sep-2019 3.1% 3.6% 0.9%
Oct-2019 3.2% 3.3% 3.5%
Nov-2019 3.4% 3.0% 5.2%
Dec-2019 2.9% 3.1% 0.8%
Jan-2020 3.0% 3.1% 2.6%
Feb-2020 3.1% 3.0% 5.6%
Mar-2020 3.6% 4.0% 10.1%
Apr-2020 8.0% 10.8% 64.5%
May-2020 6.7% 15.6% -11.4%
Jun-2020 5.1% 16.3% -13.3%
Jul-2020 4.9% 5.2% 2.1%
Aug-2020 4.8% -1.2% 2.9%
Sep-2020 4.8% -3.0% 1.2%
Oct-2020 4.6% 0.2% 0.8%
Nov-2020 4.6% 2.0% 5.0%
Dec-2020 5.5% 3.2% 11.5%
Jan-2021 5.3% 4.5% 0.4%
Feb-2021 5.2% 5.5% 4.5%
Mar-2021 4.4% 4.2% 0.8%
Apr-2021 0.6% 3.6% 5.7%
May-2021 2.2% 3.3% 6.5%
Jun-2021 4.0% 4.7% 6.5%
Jul-2021 4.3% 5.7% 6.1%
Aug-2021 4.3% 6.0% 3.6%
Sep-2021 4.8% 5.7% 6.4%
Oct-2021 5.4% 5.5% 7.6%
Nov-2021 5.3% 5.8% 4.7%
Dec-2021 4.9% 6.1% 5.9%
Jan-2022 5.4% 6.1% 7.1%
Feb-2022 5.2% 5.6% 1.5%
Mar-2022 5.6% 5.2% 5.8%
Apr-2022 5.5% 4.4% 3.8%
May-2022 5.2% 4.3% 3.8%
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Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics public data series

 

The acceleration of inflation is global: Difference in core inflation rates from 12/2020–4/2022, compared to 2 years pre-pandemic

Nation Difference in core inflation rates from 12/2020–4/2022
Czech Republic 7.2%
Poland 6.2%
Lithuania 5.7%
Estonia 5.3%
Slovak Republic 4.7%
Hungary 4.6%
Latvia 4.2%
Portugal 3.7%
Ireland 3.5%
USA 3.3%
United Kingdom 3.0%
Slovenia 2.6%
Denmark 2.6%
Germany 2.4%
Iceland 2.3%
Netherlands 2.2%
Finland 2.1%
Spain 2.1%
Luxembourg 2.0%
France 1.9%
Italy 1.4%
Sweden 1.4%
Greece 1.1%
Austria 1.0%
Belgium 1.0%
Switzerland 0.9%
Norway 0.7%
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Source: Harmonized index of consumer price data from the Organization for Economic Cooperation and Development (OECD), core prices for the US from the Bureau of Labor Statistics (BLS). 

Core inflation between 12/2020 and 4/2022 is expressed at an average annualized rate. Pre-pandemic inflation is measured as average annualized rate from 12/2017 – 12/2019. 

Labor costs are still dampening, not amplifying, inflation: Prices and labor costs during 1970s and from 2020Q4–2022Q1

Prices Unit Labor Costs
1970s 7.0% 7.4%
2020Q4–2022Q1 8.5% 5.6%
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Source: Data from Table 1.15 from the National Income and Product Accounts (NIPA) program of the Bureau of Economic Analysis (BEA).

Nominal GDP (Demand, kind of) and Potential Output (Supply, kind of) relative to CBO pre-pandemic forecasts

Potential output Nominal GDP Projected Potential ouput Projected Nominal GDP
2019Q4 100.0% 100.0%
2020Q1 99.5% 97.7%
2020Q2 97.4% 87.7%
2020Q3 95.4% 94.1%
2020Q4 96.5% 94.6%
2021Q1 96.4% 96.1%
2021Q2 97.1% 98.3%
2021Q3 97.1% 99.3%
2021Q4 99.2% 101.8%
2022Q1 99.8% 102.4% 99.8% 102.4%
2022Q2 100.6% 103.0%
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Source: Nominal gross domestic product (GDP) from Table 1.1.5 from the BEA NIPAs. 

Forecasted nominal GDP and forecasted potential output taken from the Congressional Budget Office (CBO) Budget and Economic Outlook from January 2020. Real-time potential output is estimated by taking difference between forecasted measures of labor force participation and trend measures of capital services and total factor productivity (TFP) growth and actual measures since 2019. 

Pandemic distortions on both demand and supply-side spark inflation: Global supply chain pressure index and change in durable goods share, 1998–2022

Quarter Global supply chain pressure index (supply dysfunction) Durable goods share (demand spike)
1998Q1 -0.47 -0.12
1998Q2 -0.48 0.40
1998Q3 -0.93 0.26
1998Q4 -0.65 0.47
1999Q1 -0.24 0.39
1999Q2 -0.38 0.40
1999Q3 -0.48 0.39
1999Q4 -0.07 -0.03
2000Q1 -0.30 0.50
2000Q2 0.08 -0.17
2000Q3 -0.09 -0.16
2000Q4 -0.91 -0.08
2001Q1 -1.02 -0.36
2001Q2 -1.08 -0.13
2001Q3 -0.73 -0.12
2001Q4 -1.12 0.57
2002Q1 -0.62 0.20
2002Q2 -0.41 0.30
2002Q3 -0.87 0.40
2002Q4 -0.78 -0.43
2003Q1 -0.35 -0.33
2003Q2 -0.27 -0.07
2003Q3 -0.12 -0.11
2003Q4 -0.30 -0.02
2004Q1 -0.14 0.20
2004Q2 0.56 -0.11
2004Q3 0.01 -0.19
2004Q4 -0.07 -0.06
2005Q1 -0.20 -0.23
2005Q2 -1.15 0.00
2005Q3 -0.62 -0.05
2005Q4 -0.50 -0.47
2006Q1 -0.54 -0.21
2006Q2 0.08 -0.45
2006Q3 -0.19 -0.40
2006Q4 -0.35 -0.04
2007Q1 -0.69 -0.19
2007Q2 -0.46 -0.12
2007Q3 -0.16 -0.18
2007Q4 -0.40 -0.20
2008Q1 0.11 -0.45
2008Q2 0.14 -0.58
2008Q3 0.25 -0.83
2008Q4 -1.05 -1.22
2009Q1 -0.37 -0.88
2009Q2 0.03 -0.74
2009Q3 -0.84 -0.19
2009Q4 -0.56 0.02
2010Q1 0.05 -0.04
2010Q2 0.22 0.05
2010Q3 0.35 -0.21
2010Q4 0.64 0.12
2011Q1 0.68 0.17
2011Q2 0.97 -0.01
2011Q3 -0.08 0.02
2011Q4 -0.09 -0.02
2012Q1 -0.02 0.00
2012Q2 -0.53 0.03
2012Q3 -0.30 0.02
2012Q4 -0.12 0.06
2013Q1 -0.33 0.07
2013Q2 -0.72 0.10
2013Q3 -0.47 0.03
2013Q4 -0.40 -0.11
2014Q1 -0.48 -0.13
2014Q2 -0.72 0.00
2014Q3 -0.72 0.05
2014Q4 -0.63 0.14
2015Q1 -0.41 0.12
2015Q2 -0.52 0.10
2015Q3 -0.48 0.13
2015Q4 -0.47 0.08
2016Q1 -0.68 0.08
2016Q2 -0.38 -0.02
2016Q3 -0.10 0.01
2016Q4 -0.19 -0.01
2017Q1 0.21 -0.06
2017Q2 0.06 -0.05
2017Q3 0.42 -0.07
2017Q4 0.83 0.07
2018Q1 0.42 0.04
2018Q2 0.49 0.05
2018Q3 0.51 0.01
2018Q4 0.50 -0.15
2019Q1 0.31 -0.18
2019Q2 -0.36 -0.09
2019Q3 -0.20 -0.03
2019Q4 0.07 -0.01
2020Q1 1.32 -0.10
2020Q2 2.94 0.45
2020Q3 1.51 1.17
2020Q4 0.87 1.10
2021Q1 1.91 1.97
2021Q2 2.77 1.66
2021Q3 3.28 0.30
2021Q4 4.25 0.39
2022Q1 3.11 -0.16
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Source: Data on durable goods consumption as a share of overall GDP from Table 1.1.5 from the BEA NIPAs. Index of global supply chain pressure calculated by the Federal Reserve Bank of New York. 

Durable goods consumption as share of GDP calculated as the 4-quarter change in durables good consumption as a share of GDP. Higher values of supply chain dysfunction indicate greater levels of supply-chain delay and dysfunction. 

Since pandemic shock, labor costs make historically small contribution to price growth, while profits make historically large contribution: Contribution of cost components to price increases in the non-financial corporate sector

Unit labor costs Nonlabor inputs Profits
Historical average 61.8% 26.9% 11.3%
Since 2020Q2 (recession’s trough) 19.1% 42.6% 38.2%
Since 2020Q4 (approx. beginning of inflation) 40.0% 38.3% 22.5%
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Source: Data from Table 1.15 from the BEA NIPAs. 

Profit margin spike of 2021 is relenting – but margins are still historically high: Pre- and post-tax profit margins, recent and historical averages

Pre-tax Post-tax Pre-tax average, 1979–2019 Post-tax average, 1979–2019
2016Q1 16.0% 12.7% 13.1% 9.6%
2016Q2 14.7% 11.3% 13.1% 9.6%
2016Q3 14.6% 11.4% 13.1% 9.6%
2016Q4 14.0% 11.0% 13.1% 9.6%
2017Q1 14.5% 11.9% 13.1% 9.6%
2017Q2 14.6% 12.0% 13.1% 9.6%
2017Q3 14.1% 11.4% 13.1% 9.6%
2017Q4 14.2% 11.6% 13.1% 9.6%
2018Q1 14.5% 12.4% 13.1% 9.6%
2018Q2 14.8% 12.4% 13.1% 9.6%
2018Q3 15.3% 13.0% 13.1% 9.6%
2018Q4 15.8% 13.4% 13.1% 9.6%
2019Q1 14.1% 12.0% 13.1% 9.6%
2019Q2 14.6% 12.3% 13.1% 9.6%
2019Q3 14.6% 12.6% 13.1% 9.6%
2019Q4 14.9% 12.6% 13.1% 9.6%
2020Q1 13.2% 11.5% 13.1% 9.6%
2020Q2 13.1% 11.1% 13.1% 9.6%
2020Q3 17.7% 15.2% 13.1% 9.6%
2020Q4 15.8% 13.4% 13.1% 9.6%
2021Q1 16.9% 14.3% 13.1% 9.6%
2021Q2 19.0% 16.1% 13.1% 9.6%
2021Q3 18.5% 15.8% 13.1% 9.6%
2021Q4 17.8% 15.1% 13.1% 9.6%
2022Q1 17.0% 13.9% 13.1% 9.6%
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Source: Data from Table 1.15 from the BEA NIPAs.