Hiring slows, economic worries mount as hope fades for more federal pandemic aid
WASHINGTON – The last monthly jobs report before the election showed the third straight month of a weakening recovery in employment as the nation added just 661,000 positions in September, down sharply from the 1.5 million gained in August.
And while the unemployment rate fell to 7.9% from 8.4% in August, that wasn’t good news given the reason: About 700,000 workers dropped out of the labor force, suggesting many are striking out in the job market.
The federal government’s report Friday came hours after President Donald Trump confirmed that he and his wife tested positive for the coronavirus, giving a double jolt to his reelection campaign promising a speedy “V-shaped” recovery and an end to the pandemic.
The employment report, which covered both new jobs and those filled by calling back laid-off workers, seemed to confirm many analysts’ pessimism over the nation’s economic outlook, even as some other measures pointed toward a brighter future.
Retail sales, housing activity and business capital spending have been stronger than expected recently, thanks in part to federal pandemic-aid programs that are now largely expired, as well as robust monetary support from the Federal Reserve. The latest measures of consumer confidence showed gains, an especially encouraging sign when consumer spending accounts for some 70% of total economic activity.
The contrast between such positive indicators and the darker signs in both the jobs report and the views of most mainstream analysts largely reflects the unique quality of the recession triggered by the COVID-19 pandemic. Unlike in past downturns, when the economic damage usually has been spread more broadly, today there are essentially two economies: Millions of Americans, especially lower-wage workers, have been rocked by layoffs and lost incomes, while millions of others have remained largely untouched, mostly in higher-income, white-collar jobs that can be done remotely.
What makes the dramatic fall-off in job gains last month worrisome is that it suggests the economic destruction of the pandemic has begun to spread upward into the previously stronger segments of the workforce. That is happening amid indications Thursday that negotiations for up to $2 trillion in further federal relief have all but collapsed between Congress and the White House.
“It is clear that the economic rebound is entering a new, weaker phase,” said Michael Pearce, senior U.S. economist at the research firm Capital Economics.