The economy added a meager 49,000 jobs in January and the unemployment rate fell slightly from 6.7 percent to 6.3 percent, signaling the ongoing fragility of the labor market recovery. Economists had expected 50,000 jobs to be added and the jobless rate to remain unchanged.
January’s report, the first monthly release under President Joe Biden, is an improvement from December, which saw a reversal of 227,000 jobs. However, it does not even capture the millions of people economists estimate have dropped out of the labor force and are no longer looking for work. Nearly 18 million Americans continue to receive unemployment benefits of some kind.
“That isn’t going to do much to hammer away at this huge pool of unemployed,” said Mark Hamrick, senior economic analyst at Bankrate. “I think we’re still in the dark days of winter with respect to the pandemic and the economy.”
With a significant portion of the economy still shut down, the monthly figure is still four times the pre-pandemic level.
“Once the vaccine starts to gets widely distributed and our case counts start to go down, there is going to be a pop,” said Philip Noftsinger, executive vice president at CBIZ, Inc., a consulting firm that tracks small business employment trends.
Economists and policymakers alike say American families and mom-and-pop businesses will need more support if they in order to survive until the spring. “The consumer is going to be spending when things open back up. We just have to get there,” Noftsinger said.
Although more locations around the country are easing restrictions, Noftsinger said people’s reluctance to shop, dine out and engage in other social activities is a “soft cost” these businesses bear. Even in the absence of restrictions, there is a fear factor that weighs heavily on Main Street’s ability to rebound. “Small businesses are still struggling,” he said.
A new report by 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 aid. President Joe Biden and Congressional Democrats are pushing for a $1.9 trillion package that would include $1,400 stimulus checks for many Americans.
Economists who have warned for months of a K-shaped recovery said this level of support is necessary because the pandemic continues to inflict pain unequally. In particular, it has left the travel, dining and entertainment sectors lagging badly. A more robust economic recovery that includes these sectors has been hamstrung by worrisome new virus variants and a slow, disjointed vaccine rollout. “We need to see more jobs added in leisure and hospitality. That’s ground zero for the jobs we lost,” Hamrick said.
While Americans are still buying, spending on services remains very low, he added. “This speaks to the fact that the economy still has a way to go even to gain further healing.”
Source: | This article originally belongs to Nbcnews.com
