Friday, January 8th, 2021
Surprise in December
Corona destroys 9.4 million US jobs
The corona pandemic destroyed more jobs in the USA last year than ever since the 1939 survey. After some relaxation in the past few months, jobs were lost again in December. One of the reasons: the long ring for further economic aid.
In view of the corona pandemic, more jobs were lost in the USA last year than in decades. A report by the Ministry of Labor shows that 9.4 million jobs have been cut across the country. That was the biggest job loss in the series that began in 1939. Last year’s job losses exceeded five million jobs lost in 2009 during the recession caused by the housing and financial crash.
After seven months with some extremely strong growth, the US labor market lost jobs for the first time in December. According to the US Department of Labor, 140,000 jobs were lost in the private sector and the state. Economists, however, had expected an increase of 50,000 jobs.
Job growth has recently slowed sharply as cold weather, rising Covid-19 infections, and new restrictions for companies hamper recovery from the pandemic. The figures for the two previous months have been revised upwards by 135,000 cumulative jobs: the ministry now reported a job increase of 336,000 for November and 654,000 for October.
The separately collected unemployment rate remained at 6.7 percent in December, while economists had expected an increase to 6.8 percent. Private households are surveyed for these statistics, while companies and authorities are surveyed for the number of employees. The so-called participation rate – i.e. the share of the labor force in the total population of working age – stagnated at 61.5 percent.
US hourly wages rose by 0.8 percent to $ 29.81 on Monday. Economists had only expected an increase of 0.2 percent. Year-on-year, wages were 5.1 percent higher.
In the opinion of LBBW chief economist Uwe Burkert, “above all the concern whether the strongly polarized US Congress would be able to agree on a new economic stimulus package to mitigate the consequences of the pandemic before the end of 2020, turned job creation significantly into the red”. The drastic increase in the number of new infections is also likely to have been a major burden.