As the world awaits a winner to emerge from the United States presidential election, a snapshot of the country’s labour market on Friday showed just what a daunting economic recovery task awaits either President Donald Trump or his Democratic rival Joe Biden.
The economy added 638,000 jobs in October, the US Bureau of Labor Statistics reported on Friday – 34,000 fewer than September’s revised number – while the unemployment rate ticked down to 6.9 percent.
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Notable gains were made in leisure and hospitality, professional business services, retail trade, and construction.
This is a solid report and the headline numbers were better-than-expected. But the economy has a way to go to recover its pre-pandemic strength.
Even with October’s fall, the unemployment rate is still nearly twice February’s level of 3.5 percent.
The number of employed people categorised as “part-time for economic reasons” – meaning they would like a full-time job – increased by 383,000 to 6.7 million in October. And some 15.1 million people said they could not work last month because their employer had closed shop or lost business to the pandemic.
The country is now in its ninth month of recession. And though the economy bounced back strongly in the third quarter – having entered recession in the first and suffered a record plunge in the second – it is still a long way from its pre-pandemic strength.
A little more than 12 million of the 22 million jobs lost in March and April as lockdowns swept the nation have been recovered.
Low wage service workers, minorities, women and youths have born the brunt of the COVID-19 economic carnage and re-establishing their foothold in the labour force is becoming more challenging as an increasing share of temporary layoffs become permanent job losses.
The fraction of unemployed Americans whose previous jobs have been eliminated for good increased from 10 percent in April to about 40 percent in September, researchers Stephanie Aaronson and Wendy Edelberg at left-leaning think tank Brookings found.
The trend is troubling because the longer people are out of work, the more likely it is that their skills will erode, making it harder for them to re-enter the workforce.
Moreover, the landscape is becoming more difficult for jobless Americans pounding the pavements in search of work.
While some sectors of the economy – like the housing market – have been on fire thanks to the Federal Reserve keeping interest rates at rock bottom, other sectors, such as restaurants, hotels, airline travel and other customer-facing services – are still struggling and staring down the barrel of a tough winter.
Compiling the difficulties – the march back to full economic health is downshifting after federal lifelines to the unemployed and small businesses expired in late July.
More federal protections are set to lapse at the end of December including the CDC’s moratorium on evictions.
On Thursday, Fed Chairman Jerome Powell said the outlook remains “extraordinarily uncertain” and cited key risks to the recovery including surging COVID-19 infections in the US and abroad that are reintroducing business-sapping restrictions. Households blowing through their savings as Washington remains gridlocked over another round of virus relief aid is another big risk.
Powell signalled – as he has repeatedly – that the Fed cannot shoulder the recovery burden alone, saying that “fiscal policy” – Fed speak for congressional virus aid packages – is “one of the main reasons why the recovery has been as good as it’s been so far”.
The Senate majority leader, Republican Mitch McConnell, said he would like to see another round of stimulus passed before the year is out. But as the odds narrow for Democrats to gain control of the Senate, expectations are growing that Congress will likely pass a slimmed-down stimulus package.