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A weakening labor market is raising fears of a double-dip recession heading into the winter with no relief in sight from Congress.
New figures on Wednesday showed job growth in the private sector last month fell to its slowest pace since July as coronavirus cases, hospitalizations and deaths hit record highs.
The Labor Department’s release of the November jobs report on Friday will provide the broadest view of just how much the U.S. workforce has weakened eight months into the pandemic. While U.S. employers are expected to have added roughly 400,000 jobs last month, economists fear that the progress made since April could slip into reverse without more help from the White House and lawmakers.
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Scott Clemons, chief investment strategist at Brown Brothers Harriman & Co., warned that a failure to bridge the gap between the coronavirus-ridden economy and the imminent promise of a post-pandemic future could deepen a cycle of layoffs, declines in consumer demand and business closures.
“We’ll still add half a million jobs or so [in November]. But that still leaves a pretty big hole from earlier this year, and the pace of recovery is kind of stagnated,” he said.
A gain of 500,000 jobs for November would be less than the 638,000 added the previous month. The U.S. has added jobs every month since the spring but is still about 10 million jobs in the hole compared with February due to massive layoffs when the coronavirus first took hold in March and April.
“The problem is, as time goes on, every additional week that you can’t go to work because your restaurant or your car dealership or whatever it is shut down, that’s one week closer to that institution never opening again,” Clemons said.
The recovery from the onset of the pandemic — which caused the worst economic downturn since the Great Depression — has shown signs of losing steam for months.
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Monthly job gains have declined in each of the past five months, the number of new weekly applicants for jobless claims has remained above pre-pandemic records since March and growing numbers of households are experiencing food and housing insecurity that could be particularly devastating amid the pandemic.
More than 30 percent of U.S. adults expect someone in their household to lose employment income within the next month, according to survey data released Wednesday by the Census Bureau. Nearly 12 percent say they have been unable to sufficiently feed their households over the past week, and almost a third of adults say they expect to face foreclosure or eviction within two months.
While the national unemployment rate of 6.9 percent as of October is well below the levels initially predicted by economists, policymakers say that figure masks the intense suffering facing families who’ve exhausted their savings and have been unable to find work.
Federal Reserve Chairman Jerome Powell told lawmakers Wednesday that the unemployment rate for the least wealthy fifth of the country is roughly 20 percent, more than 6 percentage points above the national peak of 14.7 percent in April.
“Those are people with relatively low savings, low wealth, and we would be concerned that they’d be vulnerable to losing their houses or their rentals and just be in a very difficult place,” Powell said, urging lawmakers to extend unemployment protections that were part of the record $2.2 trillion CARES Act signed into law in late March.
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As the unemployed struggle to find work amid skyrocketing coronavirus cases, small businesses are suffering from steep declines in revenue that have left them unable to reopen and rehire.
The percentage of employees working at small and midsize businesses is 23 percent lower than it was in January, according to data from workforce management software company Homebase.
Homebase also reported that declines in the number of businesses open, employees working and hours worked showed an economy just as weak as it was before summer’s jobs rebound, a foreboding sign for Friday’s employment report from the Labor Department.
“As COVID cases continue to climb across the nation, we expect conditions to worsen, placing increased pressure on Main Street as small businesses continue to struggle to survive in the current environment,” wrote Homebase Vice President Ray Sandza and manager Kevin Liang.
Whether a dour November jobs report will shake Congress out of gridlock could be crucial to bridging the gap until coronavirus vaccines allow the economy to return to normal. Previous jobs reports have done little to break the months-long partisan stalemate over relief negotiations, as Democrats typically cite the long road to recovery while Republicans tout the progress already made.
The new jobs numbers, however, will be the last monthly employment figures during the 116th Congress, and they come the same week that a bipartisan, bicameral group of lawmakers introduced a $908 billion relief package they’re hoping will appeal to Democrats and Republicans alike.
The November report also comes as the country approaches the so-called COVID cliff, with several pandemic-related protections slated to expire on Dec. 31. Without more relief from Congress, the Friday jobs report could provide a glimpse of the economic challenges that lie ahead next month when President-elect Joe BidenJoe BidenLawsuit alleges 200K Georgia voters were wrongly purged from registration list GOP lawmaker blasts incoming freshman over allegations of presidential voter fraud Haaland has competition to be first Native American to lead Interior MORE takes office.
“The economic data will point to not just lower rates of increases, but declines in many ways in terms of the labor market,” said Elizabeth Pancotti, a policy adviser at progressive nonprofit Employ America.
“We’ll start to see many small businesses and restaurants close. And for those in the labor market, we’ll see not only additional layoffs, but fewer jobs for people who are unemployed.”