Slow US job growth, new virus cases raise doubts on recovery’s strength
WASHINGTON: US employment growth slowed considerably in July, underscoring an urgent need for additional government aid as a resurgence of COVID-19 infections threatens to snuff out the nascent economic recovery. The Labor Department’s closely watched employment report on Friday came as Democratic leaders in Congress and top aides to President Donald Trump struggled to negotiate a fiscal package. Trump, who lags former Vice President Joe Biden, the presumptive Democratic Party nominee, in polls ahead of the Nov. 3 election, threatened to bypass Congress with an executive order.
“The jobs recovery is on very shaky ground and without seat belts for the unemployed provided by additional fiscal stimulus the economy could be in for a very bumpy ride,” said Chris Rupkey, chief economist at MUFG in New York. “There cannot be sustainable economic growth if the country has to carry on with the crushing weight of massive unemployment.” Nonfarm payrolls increased by 1.763 million jobs last month after a record rise of 4.791 million in June. Excluding government employment which was artificially boosted by a seasonal quirk related to local and state government education, and temporary hiring for the 2020 Census, payrolls rose 1.462 million, stepping down from 4.737 million in June.
Economists polled by Reuters had forecast 1.6 million jobs were added in July. While the number exceeded expectations, the economy has regained only 9.3 million of 22 million jobs lost between February and April. Blacks continued to experience high unemployment. Racial inequality is a dominant theme in November’s election.
Economists believe July was probably the last month of employment gains related to the rehiring of workers after the reopening of businesses. A $600 weekly unemployment benefit supplement, which made up 20 percent of personal income, expired last Friday. Thousands of businesses have exhausted loans offered by the government to help with wages, which economists estimate saved around 1.3 million jobs at the program’s peak. Bankruptcies are accelerating, especially in the retail sector. Coronavirus infections have soared across the country, forcing authorities in some of the worst-affected areas in the West and South to either shut down businesses again or pause reopenings, sending workers back home. The West and South account more than a third of the nation’s employment.