Ever since COVID-19 began to inflict swift global economic devastation, many figures in the political and financial worlds have called for an equally swift “V-shaped” recovery to take place. Advocates of such a theory claim that while the domestic economy has endured a monumental drop, the path from trough to peak will be just as — if not more — monumental. While this direction seems reassuring in theory, the latest jobs report appears to be painting a different picture.

To begin, it is worth noting the validity of the first part of the “V-shaped” recovery theory. By virtually any leading indicator, the American economy experienced a dramatic decline in a very short period of time. After growing at an annualized rate of 2.4% to close out the final quarter of 2019, the pre-pandemic U.S. economy was performing very well. Furthermore, the U.S. unemployment rate stood at 3.5% in December 2019, one of the lowest rates on record. However, after taking the world by surprise in early 2020, these indicators began to deteriorate quickly. For Q1 2020, the U.S. economy declined by an annualized rate of 5%, as the initial impacts of the pandemic surfaced. Though this decline was substantial, it was dwarfed by the 31.4% annualized rate at which the U.S. economy shrank in the following quarter. Over the course of six months, the most powerful and successful economy in the world went from growing at a consistently positive rate to experiencing its largest quarterly decline on record. In terms of employment, the U.S. unemployment rate experienced a sharp increase from the Dec. 2019 level of 3.5%, rising to 14.7% in April 2020, suggesting a rapid onslaught of those actively looking for work.

After large-scale rounds of government intervention, including the passing of a historic $2.2 trillion economic stimulus known as the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in March, a “V-shaped” recovery seemed more plausible. From April to August, the U.S. unemployment rate fell from 14.7% to 8.4%, a decrease of more than 42%. While eagerly-awaited Q3 2020 GDP growth rate figures will not be officially released until Oct. 29, numerous firms and institutions have increased their preliminary estimates, suggesting a faster-than-anticipated rate of economic growth. In early Sept., economists at Goldman Sachs increased their estimate of Q3 2020 GDP growth from 30% to 35%, citing improved consumer spending as the main catalyst. The Federal Reserve Bank of Atlanta also recently increased growth estimates, suggesting that Q3 2020 GDP will grow at an annualized rate of 34.6%, an increase of more than 2% from its prior estimate published on Sept. 25.

While the aforementioned data appears promising, the most recent jobs report makes me less confident that a genuine “V-shaped” recovery is in place. From April to August, the U.S. unemployment rate declined by a median of 13% on a monthly basis, a rate, if sustained, indicative of a “V-shaped” recovery. However, in the most recent employment report, which reflects on the job market for the month of September, the Unemployment Rate fell from 8.4% to 7.9%, a decrease of 5.95%, well below the median of the prior months. Even though the Unemployment Rate declined more than originally expected, this was due to an overall decline in labor force participation. Since the Unemployment Rate only accounts for those who are actively looking for work within the civilian labor force, it can be misleading to gauge the health of the labor market on that indicator alone. If the Labor Force Participation Rate decreases, it is very possible for the Unemployment Rate to fall as well. After all, if there are fewer people who are participating in a given labor market, there are theoretically fewer people to be considered unemployed. In the case of the United States, Labor Force Participation fell to 61.4% in September, a decrease of 0.49%. While this may seem like an insignificant rate, if one were to take 0.49% of the pre-pandemic labor force (164.6 million), that rate represents a decline of 806,540 able-bodied individuals participating in the labor force. That is hardly insignificant.

The United States added 661,000 jobs in the month of September, a large number under conventional economic conditions, but a number far from the necessary 800,000 value that economists on Wall Street had projected. According to Nick Bunker, an economic research director at Indeed, “This [jobs] report is an illusion of progress at a time when we needed accelerating gains in the labor market. The number of jobs added this month is just not enough.”

I tend to agree with Mr. Bunker. As the initial round of fiscal stimulus wears off, and with Congress at a standstill over future economic relief measures, the most recent jobs report not only fell short of the necessary level of growth within the labor market but also suggests that the broader “V-shaped” economic recovery may have hit a wall.