“What’s really driving the economy is still the path of the virus.”
January 8, 2021, 1:55 PM
• 5 min learn
The U.S. unemployment price was 6.7% in December — unchanged from the earlier month — and employers minimize some 140,000 jobs, the Department of Labor mentioned Friday.
“What’s really driving the economy is still the path of the virus,” Erica Groshen, a senior economics adviser at Cornell University and the previous commissioner of the U.S. Bureau of Labor Statistics, informed ABC News forward of the report’s launch. Groshen famous that December’s information probably displays the surge in instances after Thanksgiving and the restrictions put in place to quell its unfold.
Prior to the pandemic, the unemployment price within the U.S. was 3.5%.
Notable job losses final month occurred in leisure and hospitality (which shed some 498,000 jobs, the vast majority of which in meals and ingesting locations), in keeping with the DOL. Since February, employment in leisure and hospitality is down by some 3.9 million jobs. Heavy job cuts additionally occurred within the non-public training trade final month (which minimize 63,000 jobs) the DOL mentioned.
These job losses had been partially offset by some hiring final month in skilled and enterprise companies (an uptick of 161,000 jobs), retail commerce (an addition of 121,000) and building (which added 51,000).
“There have been huge losses in leisure and hospitality and travel-related industries,” Groshen famous. “And many of these are low-wage workers [who] cannot do the work from home.”
Moreover, “”these are places where business models may be changing and so many of these jobs may not come back,” Groshen mentioned.
Groshen mentioned that one in all her issues for the restoration is the rising variety of non permanent furloughs which have become everlasting job losses.
The newest financial information continues to indicate the disproportionate influence of the financial disaster on individuals of coloration. The unemployment price for white employees was 6% final month in comparison with 9.9% for Black employees, 9.3% for Hispanic employees and 5.9% for Asian employees.
This highlights the necessity for additional stimulus even when financial exercise totally resumes, Groshen mentioned.
“We don’t want to go back to full activity until it’s safe to do that, but we will want to go back to full activity as soon as we can,” she mentioned. “And that’s when we will need the stimulus, because if we don’t have the stimulus, then we are risking going into a traditional normal or recessionary cycle where lack of confidence in the future means people don’t spend, companies don’t invest, and that reduces confidence in the future.”
She continued, “And you get this sort of downward spiral of financial exercise.