Northwest Arkansas Democrat-Gazette
Jobless rate slips, but stays near high
Grim economy starts Biden term, but some sectors showing signs of hope
WASHINGTON — The number of Americans seeking unemployment benefits fell by 26,000 last week to 900,000, still a historically high level that points to ongoing job cuts in a raging pandemic. The Labor Department’s report Thursday underscored that President Joe Biden has inherited an economy that faltered this winter as virus cases spiked, cold weather restricted dining and federal rescue aid expired.
The government said 5.1 million Americans are continuing to receive state jobless benefits, down from 5.2 million in the previous week.
That suggests that while some of the unemployed are finding jobs, others are likely using up their state benefits and transitioning to separate extended-benefit programs.
More than 10 million people are receiving aid from those extended programs, which now offer up to 50 weeks of benefits, or from a new program that provides benefits to contractors and the self-employed.
All told, nearly 16 million people were on unemployment in the week that ended Jan. 2, the latest period for which data is available. That number is expected to increase in the coming weeks as people who were dropped
from the unemployment rolls after their benefits expired file new claims to take advantage of the extension passed by Congress at the last minute in December.
The nation has regained more than half the 22 million jobs that were lost to the pandemic in March and April. But hiring has weakened for six straight months. In December, it actually turned negative, with the loss of 140,000 jobs.
President Joe Biden has inherited a badly damaged economy pulverized by the pandemic, with 10 million fewer jobs than a year ago and as many as one in six small businesses shut down.
Yet there are also signs of resilience and recovery that suggest the prospect of a rebound, perhaps a robust one, by the second half of his first year in office. Despite the bleakness of the economic landscape, Biden by most accounts faces a less daunting challenge than he confronted as vice president under Barack Obama more than a decade ago in the depths of the 2007-2009 recession.
The hardships inflicted by the pandemic recession have been deep but concentrated in a few extremely hard-hit sectors and harshly unequal. Much of the economy, particularly housing and manufacturing, has held up surprisingly well compared with previous recessions. People fortunate enough to keep their jobs — disproportionately affluent Americans — have bulked up their savings. They could be poised to unleash a spending boom later this year once vaccines have been more broadly distributed.
There are also signs that the job market, for all its deep losses, is enduring less permanent harm than it has in the past and might be set up for a fast hiring recovery.
Still, for now, many signs are dreary: Consumers have retrenched, and months of job gains have turned to losses. Unemployment remains exceptionally high 10 months since layoffs first spiked last March. And the human toll of the pandemic recession, from depressingly long foodbank lines to apartment evictions, has yet to show much improvement.
All of which helps explains why Biden saw the need last week to propose another mammoth federal rescue aid package — a $1.9 trillion plan to end what he called “a crisis of deep human suffering.”
Here is a closer look at the economy the 46th president is confronting:
CONSUMER SPENDING
The pandemic took a fresh toll on the economy over the holiday shopping season, with sales at retail stores falling for three months in a row. Sales at restaurants and bars tumbled 4.5% in December and collapsed by one-fifth for 2020 as a whole.
There are early signs, though, that the $600 checks for most Americans that were authorized in last month’s rescue aid package are beginning to boost spending. Economists at Bank of America said that spending on their debit and credit cards jumped 9.7% for the week that ended Jan. 9 compared with a year earlier. That was up from a 2% year-over-year increase before the $600 payments. And the increase was particularly pronounced for those making below $50,000 a year, who spent 22% more, Bank of America said.
HOUSING MARKET
Many Americans who have kept their jobs have capitalized on the new work-from-home culture, becoming first-time home buyers or moving into larger digs. Builders broke ground in December on the most new homes since 2006. Home sales are running about 25% above year-ago levels. Four-fifths of construction jobs lost in the pandemic have returned, a much faster rebound than employment overall.
The housing boost has also lifted home prices nationwide, though the gains have been uneven. An analysis by housing website Zillow has found that the number of cities with a median home price of at least $1 million surged 17% in the year ending in November. But nearly threequarters of those gains occurred in subdivisions of nine large coastal metros, such as New York, Los Angeles and San Francisco. That trend has likely contributed to worsening wealth inequality since the pandemic began.
MANUFACTURING
Though factory output is still recovering from the initial pandemic-induced shutdowns, for once the nation’s manufacturing workers aren’t among the worst-hit. Manufacturing output rose 0.9% last month, its eighth straight increase. And factories have added jobs for eight months.
Manufacturers have benefited from a shift in spending toward goods — cars, electronics, furniture and the like — and away from travel and entertainment. Some of that pattern will likely reverse should the vaccines succeed in conquering the coronavirus.