140,000 jobs lost as gains drop off
Unemployment rate flat at 6.7%
WASHINGTON — 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 depict a sharply uneven job market, with losses concentrated among restaurants, bars, hotels and entertainment venues, many of them affecting low-income employees, while most other sectors are still adding workers. Still, the nation has nearly 10 million fewer jobs than it did before the pandemic sent it into a deep recession nearly a year ago, having recovered just 56% of the jobs lost in the spring.
The pandemic likely will continue to weaken the economy through winter and perhaps early spring, and further job losses are possible in the coming months. But many economists say that once coronavirus vaccines are more widely distributed, a broader recovery should take hold in the second half of the year. The incoming
Biden administration, along with a now fully Democratled House and Senate, also is expected to push more rescue aid and spending measures that could accelerate growth.
“Hopefully it is indeed darkest before the dawn,” said Leslie Preston, senior economist at TD Bank. “We’ve got the vaccine and the stimulus, which are imminent, and which we do expect to turn things around.”
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. Reimposed 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 and California, among others, placed strict new limits on restaurants last month.
New viral cases continue to set daily records. And on Thursday, the nation registered more covid-19 deaths in a single day than ever before, topping 4,000.
DIVERGENCE IN LOSSES
Last month, employment in leisure and hospitality industries fell by 498,000, the majority of that at restaurants, bars and other food service establishments.
Employment in another tourism-related category — amusements, gambling and recreation — fell by 92,000. Government employment declined by 42,000.
These declines offset modest gains in other sectors. Construction employment rose by 51,000 and manufacturing added 38,000, while retail advanced 120,500 and professional and business services increased by 161,000.
Andrew Walcott had to furlough four employees at his restaurant, Fusion East in Brooklyn, just before Christmas, after New York state stopped allowing indoor dining. He has shifted to takeout and delivery. Yet customers aren’t even allowed into his restaurant to pick up their food; they have to wait outside.
“That’s a hard sell when it’s snowing outside and it’s 25 degrees in New York City,” Walcott said.
In September, his restaurant was allowed to seat diners up to 25% of capacity. With that, along with takeout and delivery and a food truck, his revenue reached 60% of pre-pandemic levels. He brought back half his 15-person staff.
But after last month’s layoffs, only Walcott himself, plus a manager and a head chef, with occasional parttime help, are left.
“It’s really horrible,” he said. “You still got to pay rent, you still got to pay insurance, you still got to pay real estate taxes. You still have fixed bills every month.”
SPENDING SLUMP
Under financial pressure, consumers as a whole spent less during the holiday shopping season than in previous years, based on debit and credit card data tracked by JPMorgan Chase. 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.
The $900 billion financial aid package that Congress enacted last month should help propel a recovery, economists say. It will provide a $300-aweek federal jobless benefit on top of an average weekly state benefit of about $320. In addition, millions of Americans stand to receive $600 payments, and the Treasury Department said Thursday that 8 million of those payments were going out this week.
Friday’s monthly jobs report, the last of Donald Trump’s presidency, shows that the nation has 3 million fewer jobs than it did four years earlier. That makes Trump the first president since Herbert Hoover (19291933), early in the Great Depression, to preside over a net loss of jobs.
All the job losses during the Trump administration occurred after the pandemic struck. Before then, the unemployment rate had reached a 50-year low of 3.5%.
The data points to the significant economic challenges facing President-elect Joe Biden as he inherits one of the weakest labor markets in years.
“It’s a damaged labor market,” said Augustine Faucher, chief economist at the PNC Financial Services Group. “But it is a labor market that is poised for recovery, given the fact that we are seeing the vaccine. With support from the federal government and support from the Federal Reserve, it could see a strong rebound over the next few years.”