Unemployment could fall this year to close to where it was prior to the Covid-19 pandemic, according to a Goldman Sachs forecast that sees a hiring boom ahead.
The firm projects an unemployment rate of 4.1% that could be even lower depending on just how powerful the recovery gets amid more fiscal stimulus and a return to work for sectors hit hardest by the coronavirus.
Moreover, the forecast sees the economy returning to its pre-pandemic payroll level well ahead of the end of 2022, a view that Treasury Secretary Janet Yellen backed up Monday in an interview with MSNBC.
“The main reason that we expect a hiring boom this year is that reopening, fiscal stimulus, and pent-up savings should fuel very strong demand growth,” Goldman economist Joseph Briggs said in a note. Though the forecast already is the lowest on Wall Street, there is still “some possibility of a return to the pre-pandemic rate in the mid-3s this year.”
In February 2020, just before the pandemic hit, the jobless rate stood at 3.5%, its lowest in more than 50 years. The rate ballooned to 14.8% in April 2020 amid business shutdowns aimed at curtailing the coronavirus spread, and now has fallen to 6.2% through February.
Still, total employment remains down about 8.5 million from where it was a year ago.
A return to work for displaced hospitality workers combined with another round of massive government spending is expected to keep driving that rate lower.
“Another key reason we expect a quick labor market recovery is that two-thirds of remaining pandemic job losses are in highly virus-sensitive sectors, where employment should rebound as the economy fully reopens,” Briggs wrote. “The sharp increase in the virus-depressed leisure an