U.S. loses 140,000 jobs, first monthly loss since spring
U.S. employers shed jobs last month for the first time since April, cutting 140,000 positions, clear evidence that the economy is faltering as the viral pandemic tightens its grip on consumers and businesses.
At the same time, the unemployment rate stayed at 6.7%, the first time it hasn’t fallen since April.
Friday’s figures from the Labor Department suggest that employers have rehired roughly all the workers they can afford to after having laid off more than 22 million in the spring — the worst such loss on record. With consumer spending barely growing over the past few months, most companies have little incentive to hire. The economy still has 9.9 million fewer jobs than it did before the pandemic sent it sinking into a deep recession nearly a year ago.
The pandemic will likely continue to weaken the economy through the winter and perhaps early spring. But many economists, along with the Federal Reserve’s policymakers, say they think that once the coronavirus vaccines are more widely distributed, a broad recovery should take hold in the second half of the year. The incoming Biden administration, along with a now fully Democratic-controlled House and Senate, is also expected to push rescue aid and spending measures that could accelerate growth.
For now, the renewed surge in virus cases, as well as cold weather, has caused millions of consumers to avoid eating out, shopping and traveling. Re-imposed business restrictions have shut down numerous restaurants, bars, and other venues.
Economists at TD Securities estimate that more than half the states have restricted gatherings to 10 or fewer people, up from about a quarter in September. New York City and California, among others, placed strict new limits on restaurants last month.
Laws taking effect in 2021 will make California businesses offer employees more help to cope with the COVID-19 pandemic. Other topics include gig workers, minimum wage, and diversity on corporate boards.
The $900-billion financial aid package that Congress enacted last month should help accelerate the recovery, economists say. It will provide a $300-a-week federal jobless benefit on top of an average state benefit of about $320. In addition, millions of Americans stand to receive $600 payments, some as early as this week.
This week, Goldman Sachs upgraded its forecast for economic growth this year to a robust 6.4% from its previous estimate of 5.9%. Its upgrade was based in part on the expectation that the Biden administration, with help from the now-Democratic Senate, will support another rescue aid package.
For now, the evidence suggests that hiring and economic growth are faltering under the weight of the pandemic. On Wednesday, the payroll processor ADP reported that private employers shed 123,000 jobs in December, the first such monthly decline since April. ADP’s figures generally track the government’s jobs data over time, although they can diverge significantly from month to month.
Last month, Coca-Cola Co. said it would cut 2,200 jobs from its global workforce, with about half those layoffs occurring in the United States. 3M, a major manufacturer, has said it will lay off 2,900 workers worldwide.
In November, U.S. consumer spending declined for the first time in seven months, having steadily weakened since summer. Retailers have been especially hurt. Purchases at retail stores have dropped for two straight months.
During the holiday shopping season, consumers pulled back on spending, according to debit and credit card data tracked by JPMorgan Chase based on 30 million consumer accounts. Such spending was 6% lower in December compared with a year ago. That was worse than in October, when card spending was down just 2% from the previous year.
Restaurant traffic has also dropped, according to the reservations website OpenTable. Seated dining is down 60% this week compared with a year ago, much worse than two months earlier, when it was down about 35%.
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