The latest snapshots of the United States jobs market are painting a picture that is far from pretty, as evidence mounts that surging COVID-19 infections and Washington’s repeated failure to throw a financial lifeline to the nation’s struggling are undermining the economic recovery.
The private sector created only 307,000 jobs last month, according to the ADP National Employment Report – a disappointing read that signals the recovery is slowing and leaving millions of out-of-work Americans behind.
Last week, government figures showed applications for unemployment benefits filed with states rose for two consecutive weeks in November- the first time that has happened since July.
Other indicators are also flashing red. Spending by US consumers – the primary engine of US economic growth – rose a mere 0.5 percent in October – the weakest reading since April when the nation was in the throes of business-sapping lockdowns.
Those lockdowns in March and April threw 22 million Americans out of work and only a little more than 12 million of those jobs had been recovered as of October.
The data compiled for ADP’s November report has differed widely from the monthly jobs report produced by the US Department of Labor – the latest of which is due out on Friday.
But despite differences in methodology, the ADP report, which is produced in conjunction with Moody’s Analytics, is still viewed as a harbinger of the government’s monthly reading.
More jobs will undoubtedly have been created in November. The pressing issue though is how sharply the recovery is downshifting and how long it will take the labour market to recapture its pre-pandemic strength.
Keeping COVID-19 in check will have a huge influence on how quickly things bounce back. That is why the slew of positive news lately on the race for a vaccine has seen Wall Street stock indexes soar as investors position portfolios for where they think the economy is headed, not where it is right now.
But even if approved, COVID-19 vaccines will not be widely available for months, and the economy – and its most vulnerable members – are facing formidable challenges now.
One thing we have known for months is that the buoying effects of nearly $3 trillion in virus relief aid passed by Congress earlier this year started to fade – and fade hard – after key measures expired in July.
Among the most crucial of those lapsed measures were the $600 federal weekly top-up to state unemployment benefits and a programme for helping small businesses stay afloat.
And struggling Americans are staring down the barrel of expiration deadlines of more pandemic relief aid programmes. A national moratorium on evictions, unemployment benefits for the self-employed and gig workers, and student loan repayment relief are all set to lapse at the end of this month.
That’s why economists have been screaming from the rafters for more stimulus spending from Congress to support households and businesses still reeling from the pandemic as well as state and local governments.
Federal Reserve Chairman Jerome Powell, who has been a leading voice of that chorus, was back at it again this week.
Testifying before senators on Capitol Hill on Tuesday, Powell said “we still have a long way to go”, in this recovery, noting that 10 million pandemic job losses yet to be regained is higher than than the whole of the Great Recession.
Powell pledged that the Fed will continue to use all the tools at its disposal but sent a strong message the Fed’s lending powers “may require help from other parts of government as well, including Congress”.
But politics has been getting in the way of Congress doing its job. An acrimonious election sure did not help. And a lame-duck Trump administration does not appear keen to play ball on stimulus, especially with control of the Senate up for grabs pending the outcome of two key runoff faces in Georgia in January.
But faint fingers of light are beckoning from behind the dark curtain of political impasse. On Tuesday, a bipartisan group of US legislators unveiled a nearly $1 trillion COVID-19 relief bill.
Senate Majority leader Republican Mitch McConnell – who has floated a dramatically scaled-back $500bn targeted relief bill – shot down that bipartisan effort. But he did say more virus relief aid should be part of the $1.4 trillion spending bill which needs to pass Congress by December 11 to keep the US government open.
On Wednesday, US Treasury Secretary Steven Mnuchin told reporters President Trump would sign coronavirus relief legislation proposed by McConnell.
But just like keeping the US government’s lights on, nothing gets signed unless it passes both houses of Congress.