The U.S. Week Ahead (Jan 4-8): Mounting Job Cuts Continue To Haunt The Labor Market

The first week in the new year will usher-in a blizzard of fresh economic data, including updates on the U.S. labor market, as the COVID-19 pandemic continues to rattle the employment picture.

Government-mandated policies and related measures to contain the deadly novel coronavirus have certainly spurred massive economic turmoil in 2020, with unemployment levels having reached historical record peaks.

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employment picture

Social distancing decrees and business closures have particularly harmed the retail, leisure, and hospitality sectors, while job hiring has been mostly centered within the temporary help services and health care industries.

In November 2020, 35,000 jobs were lost in retail trade, which generally stemmed from less seasonal hiring, according to the U.S. Bureau of Labor Statistics. To date, employment in the sector has suffered 550,000 fewer paying jobs compared to February.

Meanwhile, leisure and hospitality businesses continue to see their collective workforce down by 3.4 million since February, with little change in November (+31k). 

Operating Risks & Failures

Against this backdrop, nearly 30 retailers have filed for bankruptcy in 2020, including several notable brand names such as Lord & Taylor, J.C. Penney, Brooks Brothers, J. Crew, Modell’s, GNC, Neiman Marcus, and Guitar Center, among many others.

Other companies whose operations rely on in-person foot traffic and crowd gathering such as department stores, restaurants, hotels, and movie theaters have generally witnessed sharp declines in their stock values – even as the broader index has returned around +15.3% year-to-date.

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Lynn Franco, senior director of economic indicators at The Conference Board, recently noted that consumers’ assessment of current conditions “deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence.”

She added that, as a result, “vacation intentions, which had notably improved in October, have retreated.”

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