WASHINGTON (Reuters) – The U.S. economy probably created the least jobs in seven months in December or even shrugged off workers as the country succumbed to an onslaught of COVID-19 infections, which would be the start of a gloomy winter .
Despite the expected weakness in the Labor Department’s careful report on employment on Friday, the economy is unlikely to fall back into a recession, with additional pandemic relief approved by the government at the end of December. More fiscal stimulus is expected.
Democrats won two Senate seats in the Georgia election this week, gaining control of the chamber and raising the prospects for President-elect Joe Biden’s legislative agenda.
Biden is sworn in on January 20, and the economy recovers just over half of the 22.2 million jobs lost during the recession that began in February. At least 19 million Americans receive unemployment checks.
“Job growth has slowed as the easy part of recovery in the labor market, which reminds workers, mostly runs,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The increase in COVID-19 cases and stricter restrictions to limit the spread of the virus was a major weight on the labor market in December.”
According to the Reuters survey among economists, salaries for non-farmers probably rose by 77,000 jobs last month after rising by 245,000 in November. That would be the smallest gain since job recovery began in May, leaving the job at about 9.763 million jobs below its February high.
There is even a strong possibility that the payrolls dropped in December, which would end a seven-month lease setup. First applications for unemployment benefits increased in mid-December when employers were examined for the job report.
Companies announced an increase in retrenchments of 18.9% last month and some service delivery has shrunk. Consumers were also very poor in their assessment of the labor market.
STIMULUS, VACCINES HOPE
But any decline in the payroll is unlikely to mean the start of job losses. Congress last week approved nearly $ 900 billion in additional stimulus, which is expected to increase household income and consumer spending. Economists expect the Biden administration to provide another package by March and increase infrastructure spending.
There is also optimism that the roll-out of coronavirus vaccines will be better coordinated under the new government.
“We are in the midst of a slowdown that must come through the holiday closures and the virus surge,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “Hopefully we will see better coordination on the vaccination front, but given the indifference to health that the population has shown over the past few months, it is difficult to see that the virus will do anything else if it gets worse.”
Salaries last month were likely held back by job losses in the leisure and hospitality sector, with most jurisdictions banning indoor dining. Production and construction industries probably employed more workers to meet the huge demand for goods such as motor vehicles and houses. It emphasizes a K-shaped recovery where better paid workers are doing well while lower paid workers are struggling.
The work of the government has probably diminished for a fourth consecutive month. Most of the job losses were in the education of local authorities, and most schools switched to online learning.
The unemployment rate is expected to rise to 6.8% in December from 6.7% in November. The unemployment rate is underestimated by people who mistakenly consider themselves “unemployed but absent from work”.
The government will on Friday review the series of household surveys from which the unemployment rate is obtained, which goes back five years. However, the review error is not expected to be corrected.
“Given the huge swing in most domestic survey series in 2020, these revisions are likely to be larger than usual this year, but it will obviously not be the basic story of a sharp decline in employment in the spring, followed by a sustained one. Change, do not change. but incomplete recovery in subsequent months, ”said Lou Crandall, chief economist at Wrightson ICAP in Jersey City.
The revisions will include labor force participation, whether the working-age working-class or job-seeking ratio of Americans, as well as the working-to-population ratio, which is considered a measure of an economy’s ability to create jobs.
Reporting by Lucia Mutikani; Edited by Cynthia Osterman