Over the weekend as I waited for my take-out order, I scanned the restaurant and tried to make sense of the information I was receiving. On the surface business looked good. A few tables had been added along the sidewalk and about 75% of the tables were occupied. Customers appeared to be enjoying themselves on a beautiful Saturday evening in Colorado as the support staff zipped from table to table taking orders and delivering food.

But as I looked around, I started to do some simple math. If about half of the tables were removed to comply with social distancing protocols, then the 75% occupancy level really translates to about a 40% occupancy rate on a pre-pandemic scale. Yikes!

The latest employment figures paint a similarly conflicting picture as well. Although the monthly employment reports for May and June showed that 7.5 million jobs were added over the past two months, last week, for the 16th week in a row, initial jobless claims exceeded one million applicants.

With two sets of government reports painting such a contrasting picture of the labor market, which one should we be looking at? To answer this, let us look at each report.

Weekly jobless claims are reported by the U.S. Department of Labor and count the number of people filing for the first time to receive unemployment insurance benefits through their state unemployment agencies. Jobless claims are viewed as a leading economic indicator as they measure emerging unemployment.

The monthly jobs report, also called the Employment Situation Summary and the Nonfarm Payroll Report is released by the Bureau of Labor Statistics, which is a division of the U.S. Department of Labor.  This report summarizes total nonfarm payroll employment by surveying U.S. businesses and households and sheds light on who is working in what industries and breaks the data down by age, gender and race.

So, what should we look at? Many analysts and economists agree the monthly job report is a more accurate depiction of the labor market because it accounts for job gains and losses. However, given the unprecedented times we are living in, the story doesn’t end there, as millions of jobs are being added and lost at the same time.

Jobless claims fell to a four-month low of 1.31 million for the holiday shortened week of June 28 to July 4. This was a considerable improvement over the seven million claims filed in the last week of March. In addition, 7.5 million jobs were added over the past two months, demonstrating that the economy has been rebounding quicker than originally anticipated. However, it may take several years to return to pre-pandemic employment levels and even longer if there is lasting structural damage to the economy due to a second wave or protracted recovery.

At the moment, hiring is outpacing layoffs. That explains why the unemployment rate continues to decline and is now at 11.1%. While on the surface this is good news, it would be wise to temper our enthusiasm. Continuing jobless claims and the number of people continuing to receive unemployment benefits through state and federal programs has hovered around 30 million people since the beginning of May and inched up to 32.9 million for the week ended June 20. Many economists believe this number might be artificially higher due to the additional $600/week federal unemployment stimulus, tentatively scheduled to sunset later this month, and we could see a larger return to the workforce once these benefits burn off.

When coupled with preliminary data suggesting the recovery is losing momentum due to recent COVID-19 surges in areas like Arizona, California, Florida and Texas, it’s highly likely that the early part of the recovery that featured quick re-hiring wins could soon be replaced by additional furloughs and layoffs. How we navigate and manage the next few weeks and months will be crucial in determining the extent and damage of this recession.

With my food in hand, I walked out of the restaurant thinking that like the labor reports, the restaurant was sending its own mixed messages. Business for the restaurant is no doubt better than it was a few months ago, but it’s nowhere near where it was prior to the pandemic. While the employment situation has improved over the past month, given that we lost 22 million jobs during the first two months of the pandemic, which is nearly 2.5x the jobs lost over a two year period during the Global Financial Crisis,  situations like I saw in the restaurant clearly illustrate we have a long road to recovery ahead of us.