San José, CA – On Friday, December 4, the U.S. Department of Labor released its report on the jobs market in November. Their monthly survey of businesses reported a gain of only 245,000 new jobs, about half of what economists expected and less than half of October’s job gain of 600,000 jobs. For the first time since the beginning of the recession, job losses have spread from the government, which lost almost 100,000 jobs, to retail, which lost almost 35,000 jobs. Job growth in other areas slowed from October, with the exception of transportation and warehousing, showing the continuing growth of online shopping. November’s gain barely put a small dent in the almost 10 million jobs still missing from the plunge in March and April.
The official unemployment rate in the same report did fall from 6.9% in October to 6.7% in November. But this was entirely because of more people giving up or being unable to look for work. The same report showed that there were 326,000 fewer people out of work and looking for work than in October, but this number is less than 400,000 who left the labor force. Thus, the household survey showed 74,000 fewer people working in November than in October.
The day before, on Thursday, December 2, the U.S. Department of Labor reported that new claims for regular state unemployment benefits coming in at 712,000. This is still greater than the record high set before the recession at 695,000 way back in October 1982, and more than three times as high as the pre-recession levels near 200,000. Adding in the weekly new claims for the federal Pandemic Unemployment Assistance or PUA for the self-employed and gig workers, about 1 million people sought government aid in the recession in the latest week.
The total number of people receiving government unemployment benefits across all programs for the week ending November 14 was nearly 20.2 million. For the last seven months, there has never been fewer than 20 million people getting aid, which is more than 12% of the those who are working, or are not working and are looking for work. While new claims have been flattening out at a high level, there was a continued rise in the number of people claiming long-term benefits after their first six months of regular state unemployment benefits run out. The number of people receiving the federal Pandemic Emergency Unemployment Compensation or PEUC and the State Extended Benefits programs rose by almost 140,000 in the latest week reported ending November 14.
More bad news on the economy came earlier in the week, with the report on October income and spending. Personal income sank 0.7% as compared to September. This was mainly due to less government unemployment aid, showing that many people who lost their jobs in April are losing their benefits, as opposed to getting jobs. Personal spending rose, but at less the half the rate of growth as September.
The trade deficit grew again in October after a small drop in September. The October trade deficit was $63.123 billion, more than 70% larger than the trade deficit in February of 2020, when the recession began. In a typical recession the U.S. trade deficit shrinks. For example, from 2008 to 2009 the trade deficit fell by almost 50% from $695 billion to $380 billion.
Weighing on the economy is the surging pandemic, with more than 217,000 new infections a day, a new record high. On December 3, more than 2800 Americans died of COVID-19, another new all-time high, greater previous record of more than 2700 daily deaths set in April. A record of more than 100,000 people are now hospitalized with the coronavirus, straining hospitals across the country. While many field hospitals are being built, the problem is lack of staff, especially those who are trained.
Across the country, state and local governments are imposing more restrictions on businesses in a last-ditch effort to slow the spread. But in Washington, D.C. the White House is planning more holiday parties. Trump’s efforts to deny the pandemic, his egging on dangerous practices, from not wearing a mask to holding large events, has contributed to the world’s greatest death toll for COVID-19, with almost 280,000 Americans dying from the coronavirus. At the same time the Republican leadership of the Senate continue to play hardball, holding up billions of dollars of aid desperately needed by the people. Almost two-thirds of all people collecting unemployment benefits, or more than 13 million people, face a financial cliff in a month. On December 26 the federal PUA and the federal PEUC will stop paying benefits.
The Trump administration is now cooperating to a degree with President-elect Biden in a transition. But they seem to be going out of the way to hurt the economy before the Trump administration ends. Last week, Trump’s Treasury Secretary Stephen Mnuchin ordered the Federal Reserve to return billions of dollars to the Treasury. This money guarantees against any losses from three Federal Reserve lending programs. The Fed’s lending to large corporations, medium size businesses, and state and local governments backed by the Economic Stabilization fund will now have to wind down just as the economy turns down again and pandemic relief programs are coming to an end. So, even though economy has only recovered about half the jobs lost early on, this move objectively limits the Fed’s ability to lend.
State and local governments also face hundreds of billions of dollars in budget deficits. They are estimated at $80 billion through June 2021, another $200 billion by June 2022, and another $300 billion by June 2023. State and local government spending is the only major type of spending that did not rebound after plunge in the first half of the year, and looks to be getting worse. These will lead to even more cuts and job losses, especially in public schools and colleges. Many states are considering cuts to Medicaid benefits for low-income households, putting even more people at risk of losing their health insurance after millions have already lost their jobs and employer-provided health insurance.
In addition, the moratorium on evictions and the forbearance of home mortgages are also running out with the new year. According to a survey earlier in November, there are almost 30 million tenants behind on their rent, which could lead to millions of evictions in 2021. Millions of renters are taking a last ditch stand by paying their rent with credit cards, and millions more own back rent and are at risk of eviction in 2021.
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