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The economy added 1.4 million jobs in August, and the unemployment rate fell below 10 percent

A woman waits in a food pantry line in front of a closed nail salon in Brooklyn. (Stephanie Keith/Getty Images)

The U.S. economy added 1.4 million jobs in August, sending the unemployment rate below 10 percent for the first time since March, a glimmer of good news as the pandemic continues its march across the country.

The unemployment rate fell to 8.4 percent — a positive indicator that the economy continues to slowly recover.

Yet just over half of the 22 million total jobs lost between February and April have not returned, and prominent economists are warning about the potential for a downturn in the coming months, as more states battle coronavirus outbreaks and financial hardship increases for businesses and families under pressure.

Still, at the tail end of a summer marked by a grueling pandemic, repeated economic shutdowns and a rancorous presidential race increasingly driven by concerns about violence, the news was hailed as hopeful, however modestly.

“Today’s jobs report was a good one,” Jerome H. Powell, the chairman of the Federal Reserve, said in an interview with NPR on Friday. “… We’re not really going to know the pace of the speed of the recovery with any clarity for a couple more months. But certainly the healing in the jobs market continues apace.”

The job gains for August were driven by hiring in government, particularly temporary census workers, who accounted for 238,000 new positions — more than 1 out of 6 of the jobs added overall. Other sectors that have been hit hard by the pandemic showed signs of growth, including retail, leisure and hospitality — mostly in restaurants, bars and other food establishments — and education and health services.

The report is likely to factor into the presidential race, as well as the political debate about whether to reauthorize more stimulus funding for businesses and the unemployed when Congress returns from its recess this month.

For Republicans who have been arguing against more stimulus, the report was a sign that the labor market was still recovering as of mid-August, even as some of those programs expired.

“One thing that’s pretty evident about this report is it will take wind out of the sails of the Pelosi argument we need to do a $3 trillion stimulus,” Stephen Moore, a White House economic adviser, said in an interview, referring to House Speaker Nancy Pelosi (D-Calif.).

President Trump hailed the numbers on Twitter on Friday, writing: “Great Jobs Numbers!” and “Wow, much better than expected!”

In remarks delivered in Delaware on Friday, former vice president Joe Biden said the report provides a “glimmer of hope” but argued that it masks the hardships still being experienced by lower-income workers, including many who can’t telework.

“When the crisis started, we all hoped for a few months of a shutdown that would be followed by rapid economic turnaround,” Biden said. “No one thought they’d lose a job for good or see small businesses shut down en masse. But that kind of recovery requires leadership, leadership we didn’t have and still don’t have.”

Congress has been unable to come to an agreement since an extra $600 in weekly unemployment benefits expired at the end of July, causing hardship for many families.

And many businesses have burned through support from the Paycheck Protection Program, the grant and loan initiative that was intended to shepherd companies through the worst few months of the pandemic.

Still, there has been economic momentum in recent weeks. The Institute for Supply Management said this week that its index of national factory activity increased to the highest level since January 2019, marking three months of growth. Home sales have surged over the past few months. And the stock market has been on a record-setting tear until recent days.

But many economists say there are plenty of reasons to remain cautious about the months ahead. About a quarter of the jobs gained in August were temporary, including the census workers, whose gigs typically last only a few weeks. The number of permanent job losses since February increased as well, by about a third in August, to more than 2.1 million.

And the numbers of unemployed and underemployed workers who are still able to qualify for unemployment assistance remain historically high: Twenty-nine million people are drawing some form of unemployment aid, according to the latest figures from the Labor Department.

Friday’s jobs report noted that workers are spending more time unemployed, close to 17 weeks in August, up from just two in April, which economists say represents another worrying trend. Longer unemployment periods correlate with worse economic outcomes and lower re-employment rates.

For those who lost what until recently seemed to be stable jobs, the political debate about the ups and downs in the labor market offers little in the way of comfort or resolution.

“These numbers that you see in the news, all those people are still people with families and rent to pay and kids to feed,” said Andrea Butler, 42, who lost her job doing customer service for a logistics and freight company at the end of August. She had held the position in the Chicago area for five years.

Butler says she won’t be able to get by on the $300 in unemployment benefits she thinks she’ll qualify for every week, so she’s taken a career pivot, selling tarot reading services on Etsy to support herself as she begins a job search.

“Knock on wood things will turn out, but my main concern is paying my rent,” she said. “If there’s any advice that I can give to people in my situation, [it] is that you need to figure out how to save yourself.”

Whether to approve a new package of enhanced unemployment benefits for workers like Butler will be a central part of the political debate once Congress is back in session. Some economists fear that the positive jobs data will hurt chances for more government aid, hampering the economy down the road.

“This may give lawmakers a pass to say, ‘Well our job is done,’” said Beth Ann Bovino, chief economist at S&P Global Ratings Services. “If policymakers walk away from the operating table, that could lead to less economic activity."

Economists say the benefits, as well as the other programs like PPP, helped stabilize the economy through the early months of the pandemic, and they warn that the expirations have begun to weigh on the economy as the pace of consumer spending stalls and evictions begin to pick up.

Other indicators, such as card use transactions, show that spending on things like restaurants, gas, clothing and hotels may also be leveling off.

Data from the employee scheduling company Homebase showed that the recovery of small businesses, as measured by companies opening and employees working, flatlined from July through August, after a period of improvements. On ZipRecruiter, a major job postings site, the number of listings started falling off in mid-August after 10 weeks of steady increases.

“Mid-August in our data looks like an inflection point,” said Julia Pollak, the company’s labor economist. “The job postings started coming down fast. That is very worrying.”

Though it has rebounded some, employment in many industries that have been particularly hard-hit by the pandemic — such as government, retail trade, leisure and hospitality, and manufacturing — remains well below pre-pandemic levels.

The longer businesses struggle or remain closed, the more likely they are to shutter permanently, causing not just layoffs but a crisis in real estate, as people and companies miss commercial and residential rent payments.

“The longer people don’t pay their rents, the further down the value of real estate goes, the threat to banks that are holding obligations in that area goes up,” said William E. Spriggs, chief economist to the AFL-CIO and a professor at Howard University. “If this keeps up, we get to January and we start seeing financial stress, we’re in more than deep trouble.”

Signs of economic insecurity abound. More than a quarter of Americans say they are worried about losing their jobs, according to a recent Gallup poll. The number of people who are working part-time because they can’t get full-time jobs has gone down to about 7.5 million — but that’s still up 3 million from six months ago.

Businesses are increasingly pessimistic, too. Some 46 percent of small businesses surveyed said it would take six months to recover from the pandemic, up from 31 percent in April, according to the Census Bureau’s Small Business Pulse survey.

The unemployment crisis continues to have a disproportionate effect on women and minorities compared with men and White people.

While women in December became a majority of the workforce for only the second time in modern history, that trend has reversed itself in recent months. Women now make up about 49.8 percent of non-farm jobs, down from 50.04 percent in January. They also are experiencing higher rates of unemployment, 8.4 percent, compared with men, at 8 percent.

The disparities are even starker for minorities, with the unemployment rate for Blacks at 13 percent, Asians at 10.7 percent and Hispanics at 10.5 percent, compared with 7.3 percent for White people.

The data collection error that had marred past jobs reports continues to have some effect on the numbers. The Bureau of Labor Statistics said that the unemployment rate for August could be as much as seven-tenths of a percentage point higher because of the data collection mistake. In some cases, interviewers wrongly classified workers as employed but “absent from work” because of “other reasons,” when those people probably should have been counted as temporarily laid off, and unemployed, while their workplaces were shut down.

Jeff Stein, Rachel Siegel and John Wagner contributed to this report.