It seemed appropriate that the employment numbers for the final months of 2020 were as bad as the year as a whole.
It is fair to say that the loss of 140 thousand jobs in December indicates a retrogression of the economic recovery that occurred in the summer and in the autumn. Other figures in Friday’s report confirm this basically bleak picture, such as the continuation of the depressed proportion of adults in the workforce. In the debate over which letter of the alphabet best describes the pattern of the 2020 economy, December’s figures practically exclude “V.”
But. But.
The details of this report, combined with everything else that revolves around economic policy and financial markets, make the case more optimistic. There is an opportunity for 2021 to be the year of a remarkable recovery, thanks to monetary and fiscal stimulus; the delayed effects of dynamic markets in recent months; and, above all, the prospect of widespread vaccination against coronavirus.
December’s figures point to a job crisis contained in sectors that deal with the direct effects of pandemic-related outages. Unlike the spring 2020 data, the latest figures are not consistent with the kind of widespread lack of demand in the economy that made recovery from the latest recessions so long and slow.
The biggest job losses in December were leisure and hospitality, a sector that eliminated 498 thousand vacancies. Consider what this number represents: countless restaurants, hotels and stages and arenas of closed shows; and hundreds of thousands of people back on the unemployed list and not knowing when they will be able to resume work.
The good news is that we know how and when those jobs can come back. If enough Americans are vaccinated, they are likely to feel comfortable returning to normal leisure activity patterns. An immediate boom in these sectors is plausible later this year. Americans’ economies are soaring and it’s easy to imagine the pent-up demand for travel, shows and the like.
Other sectors less directly affected by public health concerns – industries that had been in recession for just a few months – have continued to improve. They are not necessarily back to pre-pandemic levels, but on the right path to get there in no time.
Construction jobs, for example, are still 3% below pre-pandemic levels, but the sector created 51,000 jobs in December. At this rate, he will be back to full health in the spring. The story is similar for jobs in the industry, still 4 percent below February, but with 38,000 jobs added in December.
The list of sectors that fit this basic pattern – still at levels consistent with a recession, but steadily recovering their way back – is long and includes sectors as varied as trucking, rental and leasing of real estate and professional and business services .
Both policy and the market environment are expected to create favorable winds for these sectors in 2021, helping them to return to full health more quickly.
A booming stock market does not translate into more economic activity overnight. But as corporate executives make their capital spending plans and consumers make their spending decisions, rising inventories are likely to have a positive effect. This would imply that the positive effects of new market hikes in the past few weeks should start to appear as public health concerns subside.
December employment figures cover a period before Congress reaches a $ 900 billion pandemic aid package. Among other things, the project includes increased unemployment benefits that will help hundreds of thousands of workers whose jobs disappeared in December, as well as checks for $ 600 that are expected to strengthen consumer spending in the coming months.
In addition, Democratic victories in Georgia this week and the resulting majority in the Senate make it more likely that those checks will rise to $ 2,000 per person. It also means that the Biden government will have the flexibility to take on a more ambitious agenda, including spending on infrastructure, which should support general economic activity.
A Democratic Congress is also expected to provide more help to states, helping one of the other areas of job losses in December, in addition to leisure and hospitality (state and local governments cut 51,000 jobs last month).
Many things can still go wrong, such as a prolonged failure to launch the vaccine or a market correction that undermines business and consumer confidence. And none of this lessens the pain for millions of Americans who are still out of work.
But, putting it all together, and more than at any time since the start of the pandemic, the economy has a clear path back to full health.