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The U.S. economy is picking up speed again after a coronavirus slowdown late last year, but what’s missing is a big increase in hires and return to work.
First the good news.
Consumer spending soared in January and incomes grew even faster thanks to $ 600 stimulus checks from the government and more generous unemployment benefits. New home sales also rose again and are near a 14-year high. And manufacturers increased production and investment for the ninth consecutive month.
Yet, so far, the rebound in the economy has not translated into faster hiring – not thanks to a record spike in coronavirus cases over the winter.
The economy lost jobs in December and barely added any in January, leaving more than 10 million people who worked before the pandemic unable to earn a living.
Almost as bad, some 1 million new claims for unemployment benefits are filed each week with federal and state programs.
“I think the economy is improving,” said Regions Financial chief economist Richard Moody, “but the job market is still where the biggest hole is.”
See: A visual look at how an unfair pandemic has reshaped work and home
Things seem to be improving, however.
Hiring is certain to resume as coronavirus vaccines are rolled out, the weather warms, more government financial assistance floods the economy, and service sector businesses are allowed to reopen more fully. .
Many companies are going to have a lot of jobs to fill to meet an expected increase in demand for pentup, especially service-oriented businesses such as restaurants, hotels, airlines and entertainment venues which are the most important. most affected by the pandemic.
Many economists believe the rebound in hiring may have started in February. Wall Street DJIA,
predicts an increase of 150,000 jobs in the US Department of Labor’s employment report due next Friday, though estimates vary widely.
See: MarketWatch Economic Calendar
Winter storms and the power outage in Texas could act as a drag, but those events came later in the month after the government nearly completed its investigation for the February jobs report.
Read: Inflation worries are back. Should you be worried?
The official unemployment rate, meanwhile, is hard to take seriously. The current 6.3% rate is widely believed to underestimate actual unemployment by four percentage points.
The pandemic has made it more difficult for the government to collect accurate data, a problem that has not gone away. In contrast, the Federal Reserve’s own unofficial estimate puts the unemployment rate closer to 10%.
The most important figures to watch are the number of people classified as unemployed and the size of the labor force.
In January, the Bureau of Labor Statistics said 10.1 million people were unemployed, but that figure has not changed much in three months.
The size of the labor force, meanwhile, has shrunk by 4.2 million since the start of the pandemic to some 160 million. This represents 4.2 million people who have lost all hope of finding work and are not even looking.
The number of unemployed must start to decline rapidly and the size of the workforce must increase sharply before the economy can truly heal.
The Biden administration hopes to speed up the process with a pending stimulus package that could reach up to $ 2 trillion, including an additional $ 1,400 for most families.
“There is no denying the powerful impact that billions of dollars in federal spending can have on the willingness and ability to spend of consumers,” said Chief Economist Scott Anderson of Bank of the West.
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