In this news, we discuss the Uneven U.S. job market recovery points to need for focused fiscal aid.
NEW YORK / SAN FRANCISCO (Reuters) – The sharp drop in the unemployment rate in the United States last month suggests that the economy is less in need of a massive pandemic relief program than of targeted support for the hard hit sectors, even as an unprecedented rise in COVID-19 cases raises questions about the sustainability of the labor market rebound.
Overall, more people returned to work in October and the proportion of people employed or looking for work increased, US Department of Labor data showed on Friday. But the report also showed that new hires are slowing, long-term unemployment is on the rise, and employment in some struggling industries is still well below pre-pandemic levels.
The growing image of an uneven labor market recovery opens a new chapter in what is already a political battle over how many more stimulus measures are needed, and for which parts of the economy, now that the worst of the crisis seems to have passed for the economy at large.
And it came as Democratic presidential candidate Joe Biden appeared on track to secure a victory over Republican President Donald Trump in Tuesday’s election, even with Republicans poised to retain control of the Senate – a scenario according to them. Wall Street economists are leading the way for a smaller budget package. .
U.S. Senate Majority Leader Mitch McConnell told reporters in his home state of Kentucky that the drop in the unemployment rate to 6.9% in October from 7.9% in September shows that “something smaller – rather than throwing an additional $ 3 trillion on this issue – is more appropriate. “
McConnell was referring to the amount Congress has allocated so far to help the unemployed, millions of other Americans, hard-hit airlines, small businesses and many other sectors of the economy.
COVID-19 HEAD WINDS
The October jobs report suggests the need for more help is still there, but less like a flamethrower.
“I think we will have a stronger recovery if we can just get at least additional budget support, when it’s appropriate … and in the size that Congress thinks it’s appropriate,” the president said. Federal Reserve Bank Jerome Powell at a press conference Thursday after the release of the US central bank’s latest policy statement.
The US economy created 638,000 jobs in October, including 271,000 in the entertainment and hospitality industry, which suffered heavy job losses earlier this year due to the pandemic.
But employment in that sector was still 21% below February’s level, a larger gap than in any other industry and a reminder that consumers are reluctant to hurry to bars and restaurants or travel as much as they do. before. Employment in states and local communities also fell sharply, with falling tax revenues leading to budget cuts.
In contrast, hiring in the retail, utilities and finance industries has almost returned to pre-pandemic levels.
(GRAPHIC: Uneven employment recovery -)
Economists continue to warn that the first job gains are the easiest and that after a partial recovery, the labor market is likely to experience a slowdown. Meanwhile, the number of new COVID-19 cases in the United States rose 18% last week to a record 575,000, with deaths up 3% to 5,700, according to a Reuters analysis of reports states and counties.
Headwinds from the new wave of COVID-19 before winter could easily derail economic progress, said Daniel Zhao, senior economist at Glassdoor, a site Web of jobs and recruitment. “This puts the responsibility in the hands of policy makers and the next president to manage both the health crisis and the economic crisis.”
NO LONG TERRAIN EMPLOYMENT
The number of permanently unemployed people was almost unchanged at 3.7 million in October, while the number of temporary layoffs fell, a sign that more of this group could find jobs.
But the number of long-term unemployed, or unemployed for at least six months, jumped in October to 3.6 million from 2.4 million in September.
(GRAPHIC: More Americans face long-term unemployment -)
“This is a big leap and does not bode well for these workers or for the recovery of the labor market,” said Kathryn Anne Edwards, labor economist for the RAND Corporation.
And with much of the pandemic-related unemployment benefit programs run out by the end of the year, more help may be needed, some economists say. “I think there is a clear need to provide additional help to those displaced from the labor market,” said Richard Moody, chief economist at Regions Financial.
Report by Ann Saphir and Jonnelle Marte; Edited by Paul Simao
Original © Thomson Reuters
Originally posted 2020-11-06 12:56:11.