The U.S. unemployment rate has roughly returned to its pre-pandemic levels. It was about 3.5% in the fourth quarter of 2019, while it is shaping up to be about 3.8% for the first quarter of 2022.

There are many caveats and still potential for things to go awry, but this is likely indicative of our learning to live with COVID. Thanks to the ongoing vaccine rollout and the success of treatments, things just aren’t as bleak as they were two years ago. Unemployment continued to decline even as the Delta and Omicron variants swept the country – a testament to the adaptability of many companies.

The national unemployment rate is somewhat deceptive, as employment trends vary widely by city. In some cities, it has completely recovered, and in others, there is still a lot of distance to go. The tourism industry was hit hard by travel bans and will need time to adjust. The unemployment rate in cities with major tourism industries spiked to levels not seen since the Great Depression. The effects of this will be felt for a long time.

Unlike with many other indicators – which show pre-pandemic trends resuming – the pandemic has likely made permanent changes to the labor market. Some people decided to retire early rather than work remotely, some people changed careers completely, while others left the labor force to take care of family. As restrictions continue to be lifted, we expect some of these trends to reverse. The outlook remains positive in the short term, although it is slightly more uncertain in the long term.


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