The labor market recovery that started in May has been exhausted and economists forecast that the unemployment rate rose to 6.8% between November and December. It would be the first increase in the unemployment rate since April.
Biden wants to solve the job crisis in America with investments in infrastructure and green energy. That could help create long-term jobs, including 1 million jobs in the automotive industry and 10 million jobs in clean energy, according to Biden’s plan. It could also help with automation swallowing up American manufacturing jobs and driving out workers.
But the United States is also facing a short-term job crisis, which will be tricky for Biden and Congress to resolve.
The US economy needs more help than the stimulus bill that President Donald Trump signed into law last week. That package expands state unemployment benefits by $ 300 a week through March 14 and adds an 11-week extension for other pandemic unemployment programs created by the CARES Act last spring.
Republicans oppose Democrats’ efforts to increase unemployment benefits, stimulus controls, which Trump also supported, and aid to states and cities needed to keep countless government employees in work. But with the Democrats taking control of the Senate, a new, larger round of stimulus becomes more likely. And it is badly needed.
The slowing recovery of the labor market in America
Economists predict that the US labor market recovery stalled in December, lagging far behind the pre-pandemic strength of the labor market. Ten months after the pandemic and eight months after the recovery, millions of Americas remain unemployed and depend on government support to make ends meet.
December’s official jobs report, due out Friday at 8:30 a.m.ET, is expected to show that just 71,000 jobs were added last month, which would be the smallest increase since the country began its long road to recovery in May. If the forecast is correct, there will still be 9.7 million jobs lost in America since the start of the crisis.
Experts have revised their forecasts down after the ADP employment report showed Wednesday that 123,000 private sector jobs were lost last month – a much worse report than expected – with the most losses in the leisure and hospitality industries.
December’s expectations are right on trend as Covid-19 infections continue to rise, states re-impose restrictions and weekly unemployment benefit claims remain stubbornly high.
“After a softer employment report in November and a few weeks of rising initial jobless claims, another faint print (even slightly negative) probably wouldn’t be as surprising,” wrote Veronica Clark, economist at Cit,(C.) in a note to customers.
The pandemic-prone sectors are more at risk of cutting jobs again, Clark said. Plus, the retail industry probably didn’t hire that many seasonal workers for the holidays either.
The slowdown is a bad sign for the pace of the recovery in 2021 and a big call to action for the Biden government.
Economists will also be looking at worsening trends at the core of Friday’s report. For example, the number of people who dropped out of the labor force altogether and were therefore not considered “unemployed” rose in November. This is worrying because the longer a person is unemployed, the more difficult it becomes for him to return to work.
The more people fall into that category, the harder it will weigh on America’s economic recovery. That is why tackling the unemployment crisis is so essential to improving the overall economy.
