U.S. job growth has declined in the last few months, and the cold weather, increasing Covid-19 cases and new government regulations restricting businesses suggests the economy is getting weaker, WSJ reports.
U.S. Jobs Update: -140,000 in December
Unemployment Rate: 6.7%
Looking Back: The Covid-19 pandemic, and related restrictions, initially caused the economy to shed 22 million jobs in March and April. Since then, roughly 12 million have been recovered. It started with a quick return of more than nine million jobs over three months. But the rate of job growth has fallen a bit with each passing month.
It’s clear why. As mentioned before, a surge in Covid-19 cases, new government restrictions, cold weather limiting outdoor dining and a lack of federal stimulus (until late December) are all significant factors behind the slowdown.
A Reason For Optimism: Based on the latest stimulus bill and the distribution of vaccines, economists believe the “lull will be temporary.”
- The latest package includes direct payments of up to $600 for most families, as well as a $300-per-week boost for those claiming jobless benefits and more aid for businesses.
- President-elect Joe Biden has stated his intention to provide more relief, and his party will control both chambers of Congress after the Georgia Senate runoff.
- Factories also appear to be doing well outside of the rest of the market, with several health-care companies hiring to help with vaccine production.
The Takeaway: Manufacturing only represents roughly 14% of the labor market, and most jobs are in service. Industries tied to in-person interaction will only start to recover when Covid-19 cases decrease and restrictions ease.
Brace yourselves, stimulus is coming. It looks like, with a Blue Wave in the U.S., we will see more government-printed income support for consumers in response to the still-weak employment market.
This should help keep the party going in the markets until a true vaccine-driven recovery arrives. The jury is still out on what the long-term repercussions of running up the national debt will be, though…