The U.S. Department of Labor reported today that the economy added 1.4 million jobs in August, and the unemployment rate fell to 8.4 percent. According to the DOL's Bureau of Labor Statistics, there was a significant increase in government employment, which largely reflected temporary hiring for the 2020 Census. According to the Washington Post, although employers continued to bring back furloughed workers, they did so at a far slower pace than in the spring, and millions of Americans remain out of work.

The 8.4 percent unemployment rate represents a significant drop from the 14.7 percent rate in April and the 10.2 percent rate in July. The Post reported that the drop has lowered the rate below the peak of the last recession a decade ago, when unemployment briefly hit 10 percent, but joblessness is still higher than the peak of many past recessions. Beth Ann Bovino, chief U.S. economist for S&P Global, told the Post, “We still have a long way to go."

The Post observed that the jobs report offers some of the first clear data on the state of the economy as emergency federal spending winds down, including the $600 weekly supplement to unemployment benefits that represented a lifeline to households early in the pandemic. Without that supplement, which expired at the end of July, economists have warned that millions of families will struggle to pay rent and buy food, which will have a negative impact on the broader economy.

But because the August jobs data was collected early in the month, it may not reflect the full impact of the loss of benefits, said the Post. Even though it doesn't take into account those losses, the report could ease pressure on Congress to agree on a new round of emergency spending. Michelle Meyer, head of U.S. economics for Bank of America, told the Post, “If the labor market data continue to hold, if we don’t see a big destruction to consumer spending on the back of the loss of the unemployment benefits, that reduces the sense of urgency that something needs to be done prior to the election."

But, said the Post, some economists are raising the alarm that congressional inaction could set the stage for a big drop in spending in the fall, leading to more job losses and a wave of small-business failures.