U.S. economy adds 288,000 jobs as unemployment rate falls to 6.3 percent
But the pandemic still affects the labor market. In January, American employers created only 49 thousand new jobs
In January, only 49 thousand new jobs appeared in the United States, a sign that the coronavirus pandemic continues to harshly affect the economy almost a year after the beginning of the painful recession that was caused by the first wave of the pandemic..
In comparison with December, there was an increase – in the last month of 2020, the authorities reported the loss of 227 thousand jobs. On Friday, the Labor Department reported a sharp drop in the unemployment rate in January, from 6.7% to 6.4%. The decrease in unemployment is mainly due to the fact that some unemployed found work, while others stopped looking for it and are no longer officially unemployed..
The data released on Friday reflects instability in the labor market hit by the pandemic, with consumers still avoiding travel, shopping, dining, entertainment and other forms of face-to-face contact with others. With many employers still cutting their workforce, the pandemic continues to lose about 10 million jobs overall..
In the past month, the services industries dominated by employee-to-customer contact again saw their worst job losses as millions of consumers stay at home. In the service sector, restaurants, bars and hotels have cut 61,000 jobs. Retailers have cut nearly 38,000 jobs. Employment in the field of transport and warehousing decreased by 28 thousand jobs.
Women, who were disproportionately affected by the economic collapse last spring, are leaving the labor market to look after their children at home, who are attending schools online. This trend continued in January. At the same time, the number of working men increased last month.
The growth of layoffs continued. The number of first-time applications for unemployment benefits, although declining in the past few weeks, remained at an increased level last week – 779 thousand people.
The hardships afflicting millions of Americans prompted President Joe Biden to offer a $ 1.9 trillion relief package that would provide $ 1,400 payout for most U.S. citizens and a $ 400 weekly unemployment benefit in addition to benefits given out states. The package will also extend two federal unemployment assistance programs – their end will be postponed from mid-March to September..
Weak January employment data could provide additional political impetus to Biden's package. Early Friday morning, the Senate approved a bill that would allow Democrats to push Biden's $ 1.9 trillion plan through the upper house without Republican support. The document is now returning to the House of Representatives, where it will need to be approved before work on the aid package begins in several congressional committees..
The damage to the labor market since March has increased financial inequality in the United States, particularly among women and racial minorities. At the same time, Americans who are fortunate enough to keep their jobs amassed $ 2.3 trillion in savings – double what they had before the pandemic. This increased savings could help boost spending quickly once the restrictions on doing business are lifted and more Americans shop, eat and travel more often..
Economists are increasingly suggesting that as vaccinations reach critical mass in the coming months and the government provides additional stimulus, the economy and labor market will strengthen much faster than after previous recessions. Bank of America estimates that the US economy could grow 6% this year, the fastest pace since 1984..