This chart shows how employment in the US today compares to pre-pandemic times

When the Covid-19 pandemic hit the U.S. economy with full force in March 2020, stifling economic activity and erasing nearly 20 million jobs in a matter of weeks, many had hoped that this crisis would go away as quickly as it had arrived. And while most sectors and the economy as a whole have now recovered the jobs lost in spring of 2020, there are still some gaps in the recovery, as the following chart shows. The leisure and hospitality sector in particular is still almost a million jobs short of its February 2020 level, with the public sector also lagging behind in the jobs recovery.

While these numbers could be interpreted as continued weakness in the affected industries, they are to a large extent the result of employers’ difficulty to fill open positions. According to the latest JOLTS report, there were more than 1.5 million job openings in leisure and hospitality at the end of November, with 1.3 million unfilled positions in accommodation and food services alone. The same is true for government jobs, of which roughly 960,000 remained unfilled in November.

With total nonfarm employment exceeding the February 2020 (i.e. pre-pandemic) level by 1.2 million in December and job openings hovering above 10 million, the U.S. labor market remains very tight. That means labor demand outstrips supply be a significant margin despite the Fed's efforts to balance them out, which would relieve upward pressure on wages and thus cool inflation.