Payroll employment declined by 140,000 in December and the unemployment rate remained unchanged at 6.7%, reported the U.S. Bureau of Labor Statistics on Friday. The number of unemployed persons—10.7 million—was also unchanged as well in December.
These numbers are significantly lower than the April highs, but about twice their pre-pandemic levels. The December jobs report signals the end of seven months of steady job growth and shows some evidence that the U.S. economy is softening. Roughly 22 million jobs were lost back in March and April at the onset of the pandemic and a little more than half—12 million—have since been recovered.
According to MarketWatch, “Economists estimate true unemployment is several points higher because the official jobless rate doesn’t include several million people who’ve left the labor force,” as they were not able to find appropriate opportunities. According to NBC News, “A report from executive outplacement and coaching firm Challenger, Gray & Christmas found that planned job cuts rose nearly 20% in December on a monthly basis. The roughly 77,000 jobs companies announced plans to shed is 135% higher than a year ago.”
The Department of Labor said in its report, “The decline in payroll employment reflects the recent increase in coronavirus (Covid-19) cases and efforts to contain the pandemic.” In the wake of a rapid resurgence of Covid-19 and the associated shutdowns of companies, curfews, restrictions and the accompanying slowdown in business activities, hurt job growth and led to job losses. The job losses were predominantly in the leisure and hospitality sectors. This news sets the stage for a scary, long, cold winter. It’s likely to conclude that the pandemic will, in the near term, continue to weaken the economy, as the cold weather discourages activities like outdoor dining.
Daniel Zhao, the senior economist of Glassdoor, a company-rating and job aggregation site, said, “Today’s report is a harsh reminder that the pandemic controls our economic trajectory.” Zhao added, “Though the end-of-year relief bill offered temporary reprieve and the start of vaccine distribution offers light at the end of the tunnel, we’re not out of the woods yet.”
Economists and Wall Street prognosticators remain hopeful that the economy and job market will improve, as vaccines get distributed across the nation and the $900 billion financial aid package passed by Congress injects much-needed stimulus. The enhanced $300-a-week federal jobless benefit, along with the $600 payments, will help too. Investment bank Goldman Sachs, based in part on these reasons, upgraded its economic forecast for growth.
The stock market, despite the job losses, has hit new highs, largely due to hopes that the Biden administration—now that the Democrats have captured Senate control—will roll out additional substantial financial stimulus programs and a sizable infrastructure program to keep the economy moving forward. These initiatives and monies would be in addition to last week’s $900 billion stimulus package.
There is hope that by vaccinating people and fighting back against the virus by taking the appropriate health measures, along with large financial stimulus packages, the job market will be rejuvenated.