The recovery of the US economy is clearly in a precarious situation.
the unemployment rate for December was unchanged from November at 6.7% and the economy shed 140,000 jobs for the month – the first monthly net loss since April.
For economists like Mark Zandi of Moody’s Analytics, “December was a bad month for a bad year,” he says. Fortune.
Although a new $ 900 billion relief program is on its way, having been signed in late December, Zandi believes the economy will struggle for the next few months as the pandemic rages and vaccine distribution is crawling. But with the last backup deal and the “prospect of another deal on the other side of the [presidential] Grand opening, I think we’ll avoid this double dip [recession],” he says.
This Congressional relief appears to have come late, as Friday’s report shows the hard-hit leisure and hospitality payrolls fell by some 498,000 (with losses of 372,000 in food services and retail outlets). of drinks), in total down about 23% Starting from February.
And at this rate of employment growth, it may be until the end of 2023 before employment returns to February levels, suggests Zandi.
Others like Joseph Song, an American economist at Bank of America, agree that the labor market will not return to pre-pandemic unemployment levels “until 2023”, he says Fortune. “It’s going to be a long job back, we’ve only recovered about 56% of the job losses since March.”
A stimulus accelerator
But a new stimulus in 2021 could help turn that time around, some economists say.
“Before the Georgia Senate races, I would have said late 2023, maybe early 2024, because I wasn’t expecting additional budget support,” Moody’s Zandi says, referring to two races that made Georgia blue Wednesday. “But now, with the Democrats controlling the government, I think that pushes that date forward by a year – so I would say the end of 2022, maybe the beginning of 2023,” he said.
Likewise, BofA’s song believes more stimulus (particularly something that sounds like President-elect Biden’s multibillion dollar proposal infrastructure package) could accelerate the recovery of the labor market. (Currently, Song expects the unemployment rate to reach around 4% by 2022.)
This tax support is not so much relief programs like the renewed Paycheck Protection Program for Small Business Loans to stem job losses, but rather more traditional “stimulus” programs that could stimulate job creation, argues Zandi. Zandi and Song both plan another spring back-up plan to continue pushing the economy to the other side of the pandemic, and a budget package later in the year that will look like an infrastructure spending package. and social programs “that will bring us back.” to full employment faster, ”suggests Zandi, creating jobs for the unemployed in infrastructure projects.
But despite the optimism that more stimulus packages are in the cards, the Democratic majority in Congress is incredibly thin and more moderate Democrats like West Virginia Senator Joe Manchin could pose a roadblock to a greater stimulus.
However, the $ 900 billion package is still expected to provide a significant boost in light of the latest unemployment figures, and despite the Democratic Party’s infighting, those like Song say “they know this is their only opportunity to do something, so we expect additional expense. package, ”he said.
Ultimately, resuming jobs depends on the virus and the vaccine. And while more stimulus will likely help accelerate that recovery, BofA’s Song says that “what is really going to let the job market tear up is getting out the vaccines and getting people back to re-engage in the job market. ‘economy.
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