In June, employment increased by 4.8 million, with most of the gains coming from retail, leisure, and hospitality. The unemployment rate dropped to 11.1 percent, but the true rate, after adjusting for the misclassification error, is 12.3 percent. And for additional perspective: the number of jobs in the US is still almost 15 million below the February level.

The increase in jobs is simply due to the reopening of many states' economies. The big question is whether the increase in employment will continue. About 35 states, including the three most populous ones, are seeing a rise in new COVID-19 cases. This resurgence could put a damper on the momentum. As a response to the recent surge, many states and localities are not lifting further restrictions, and some are reinstituting new restrictions such as banning indoor dining. Unfortunately, many of the hardest-hit industries are very labor intensive.

At the same time, layoff rates remain historically high. Americans filed 1.4 million new applications for unemployment benefits last week. On top of that, the large government stimulus – especially the unemployment benefits it provides – will mostly end in the coming month, and its future is uncertain.

In sum, the grim reality is that the unemployment rate may remain in the 11-15 percent range for the foreseeable future. In comparison, the unemployment rate after the Great Recession peaked at 10 percent for one month. The faster we realize this the more likely we are to avoid a second Great Depression.