E US Payroll Employment Declined In December. Is This The Darkest Before The Dawn Of A Recovery?

Despite the confidence of a huge economic boost that the Biden Administration will provide Americans, COVID-19 infections continue to rise in many regions of the country.

And while Congress passed a $900 bn COVID-19 relief bill in late December, and the Biden Administration is hoping/planning for a new $1.9 trillion spending bill, we surely can expect or hope for revitalized employment pick up later this year because of the new stimulus bill.

Nonetheless, the discouraging fact is that nonfarm employment decreased by 140,000 in December.

In the two previous months, nonfarm employment increased by 245,000 in November and 654,000 in October. Indeed, as of December, overall employment in the US was 9.8 million below its pre-pandemic high of February 2019.

In other words, the American job market ended 2020 on a downer.

The measured unemployment rate (which for various reasons understates true unemployment) closed the year at 6.7% unchanged from November. As of December, 10.7 million Americans who were officially identified as unemployed.

Since the February 2019 peak in pre-pandemic employment, the US economy has lost 8.9 million jobs or 5.6% of its former level.

Another discouraging feature from the household survey is that those described as long-term unemployed, that is, individuals unemployed for 27 weeks or more, accounted for 36.8% of the 10.8 million unemployed Americans.

The U6 unemployment rate, which accounts for both unemployed and underemployed workers, was 11.7% in December versus 12% in November.

Though the financial markets and policymakers were clearly disappointed with the weak December data, given all of the major political changes over the last month, this information sounds almost like jaded history.

No doubt future expectations for the economy and job growth have improved with the election of the Biden Administration. Still, some things have permanently changed because of the pandemic.

The short-term employment picture remains quite dark.

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