The U.S. economy added a record number of jobs in May as it appeared to bounce off the bottom of the coronavirus recession, and now the chart of jobs gains and losses is starting to look like a “V.”
The possibility of a V-shaped recovery — a sharp fall in economic activity followed by a dramatic rise — has been a hot topic of debate since the coronavirus pandemic led to widespread business closures across the United States. The shape of the economic recovery is a popular guessing game on Wall Street with economists and pundits suggesting everything from a “V” to a “W” to even a Nike Swoosh as businesses were slower to get back to normal.
The better-than-expected jobs report follows a series of other recent data points that have shown a quick recovery from their pandemic-era lows and point to a V shape.
Mobility data from Apple showed that requests in directions for driving and walking had nearly recovered to pre-pandemic levels by June 1. The increase in travel demand has extended to flying as well, with major airlines announcing this week that they are bringing back some of the flights that they had suspended due to the pandemic.
Markets data has also shown sharp recoveries. Oil prices show perhaps the most dramatic “V” as light trading ahead of a contract expiration for West Texas Intermediate resulted in a brief plunge below $0 for the first time ever in April.
That sell-off may prove to be a historical anomaly, but a combination of increased gasoline demand and production cuts has brought the U.S. benchmark oil price back to near where it was in early March.
The stock market has also recovered much of its losses since late March, and it has been led by large tech stocks. The Nasdaq-100, which carries a higher concentration of big tech names than the three major averages, set a new intraday record high on Thursday, wiping out all its gains from pandemic.
And finally the S&P 500 itself on Friday was close to going breakeven for 2020, having rallied 45% off the lows.
At a news conference on Friday, President Donald Trump said “We’ve been talking about the ‘V’ — this is better than a ‘V.’ This is a rocket ship.”
To be sure, much of the economic data is now showing growth from historic lows and still has a long way to climb to reach pre-pandemic levels. For example, the unemployment rate in May was still 13.3%, above where it was at any point during the financial crisis despite a record month of gains.
(Clarification: The first chart in this story has been replaced with a bar chart. The previous chart was a line chart and could have been misconstrued to suggest all the jobs lost during the pandemic had been recovered. The bar chart shows a ‘V’ recovery could be beginning.)