Job Losses Are Back

We saw this negative jobs print from a mile away. It became clear a few weeks ago that the economy would lose jobs in December because the pandemic was shutting down businesses again. The good news is these job losses were temporary losses directly related to the shutdown rather than general economic weakness. That’s why our expectation for losses was so straightforward. If a restaurant is forced to close, the jobs will be gone. There’s not much of a prediction there.

The good news is November’s report was revised higher from 245,000 jobs created to 336,000 jobs created. That weak report hinted we might see losses in December if the trend continued. As you can see from the chart above, way before the economy regained the jobs it lost, there were losses again. The economy lost 140,000 jobs in December which missed estimates for a 50,000 gain and the lowest estimate which was a 50,000 loss.

We usually say the economy losing less/gaining more private sector jobs than overall jobs is a win, but in this case the government has been a real laggard which is worrisome. Making matters worse, the $900 billion stimulus won’t help state and local budgets. We need to wait until the next stimulus for that to happen. Specifically, there were 95,000 private sector job losses which missed estimates for a 90,000 gain.

Where The Jobs Were

Economists expected the government to lose 40,000 jobs and it lost 45,000. Local government excluding education lost 32,000 jobs and state government education lost 20,000 jobs. As you can see from the chart above, state government has been losing jobs for 4 straight months. This is a serious problem that needs to be amended through stimulus. Since the Dems won the Senate, we expect the next stimulus to include help for state and local governments. We just don’t know when that will come and how much help it will bring.

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