The economy created a meager 49,000 jobs in January and the unemployment rate fell to 6.3 percent as the size of the workforce shrank, signaling the continuing fragility of the recovery. Economists had expected 50,000 jobs to be added and the unemployment rate to remain unchanged.
The January report, the first monthly release under President Joe Biden, is an improvement over December, which saw a 227,000 job reversal. However, it doesn’t even capture the millions of people that economists estimate have left the workforce and are no longer looking for work. Nearly 18 million Americans continue to receive some form of unemployment insurance.
“The headline numbers cannot capture all the distress,” said Mark Hamrick, a senior economic analyst at Bankrate. “Just one example: about 6 million are working part-time, but want to work full time, while another 7 million are out of the workforce, but want to work and are not counted as officially unemployed. I think we are still in the days gloomy weather in relation to the pandemic and the economy. ”
With a significant portion of the economy still closed, the monthly figure is still four times the pre-pandemic level.
“As soon as the vaccine starts to be widely distributed and our case count starts to decline, there will be an explosion,” said Philip Noftsinger, executive vice president of CBIZ, Inc., a consulting firm that tracks employment trends in small businesses. companies.
Economists and lawmakers say American families and small businesses will need more support to survive until spring. “The consumer will spend it when things get back to work. We just need to get there, ”said Noftsinger.
While more locations across the country are easing restrictions, Noftsinger said that people’s reluctance to shop, dine and engage in other social activities is a “soft cost” that these companies bear. Even in the absence of restrictions, there is a fear factor that weighs heavily on Main Street’s resilience. “Small businesses are still struggling,” he said.
A new report from the Congressional Budget Office concluded that it will take until 2024 for the economy to reach full employment again, and Treasury Secretary Janet Yellen said the country “desperately” needs more help. President Joe Biden and Congressional Democrats are pushing for a $ 1.9 trillion package that would include $ 1,400 in stimulus checks for many Americans.
Economists who have warned for months about a K-shaped recovery said that this level of support is necessary because the pandemic continues to cause pain unevenly. In particular, it left the travel, restaurant and entertainment sectors far behind. A more robust economic recovery that includes these sectors has been hampered by new variants of worrying viruses and a slow and disjointed implementation of vaccines. “We need to see more jobs added in leisure and hospitality. This is ground zero for the jobs we lost, ”said Hamrick.
While Americans are still buying, spending on services remains very low, he added. “It shows the fact that the economy still has a long way to go to get more healing.”