Eight months into the pandemic, America is still struggling with its devastating economic fallout. The government’s November jobs report is expected to show America’s job market remains in disrepair. And for millions of laid-off workers already losing hope of returning to the job anytime soon, expiring unemployment benefits could make matters significantly worse.
Economists polled by Refinitiv predict 469,000 jobs were added to the US economy in November, some 169,000 fewer than in the month before. It would nudge the unemployment rate down a smidge to 6.8%, from 6.9% in October.
Experts mostly agree that the jobs recovery slowed further in November, but only a few of them expect net job losses – so far. Research firm Oxford Economics and Swiss Banque Pictet, according to Refintiv, expect modest job losses. It would be the first drop in jobs since April.
But if the November prediction is correct, America will still be down 9.6 million jobs from February, before the pandemic froze the economy. That would mean the labor market has recovered more than half of its losses after some 22 million jobs were lost in the spring. But plenty of work remains to rebuild the once-booming labor market.
“Some temporary layoffs have turned permanent, and some sectors, places, and people still face alarmingly and stubbornly high job losses,” said Indeed chief economist Jed Kolko in emailed comments.
The permanent job losses worry economists because they are bad for economic growth. For the long-term unemployed it becomes harder over time to return to work, keeping them from spending money and fully participating in the economy.
Since the pandemic crisis started, the government has stepped in to support the jobless, but various emergency benefits created by the CARES Act are expiring at year-end. Millions of Americans will likely struggle to make ends meet next year unless Congress acts fast. This could weigh on the economic outlook for 2021.
A new bipartisan stimulus plan worth $908 billion was proposed Tuesday, and extending unemployment benefits is one of the ideas the lawmakers behind the plan agreed upon, according to an aide familiar with the talks.
Ultimately, the path of the recovery hinges on the path of the virus. More people will be able to return to work when infections are under control, and hard-hit sectors, such as hospitality and travel, are expected to recover once a vaccine is in circulation.
Until then, the resurgence of Covid-19 infections is keeping economists and business owners, among others, up at night.
Manufacturers say the high infection rates are increasing their costs and decreasing productivity because localized outbreaks mean workers have to be sent home to quarantine and recover, according to comments in the Institute for Supply Management’s manufacturing survey released earlier this week.
The survey that’s the foundation of the government’s November jobs report is conducted mid-month and may have captured only part of the effect of the virus resurgence, said Benjamin Engen, market economist at Action Economics, in a note to clients.
Seasonal retail hiring for the holidays is expected to be lower than in previous years, as consumers increasingly opt to buy online rather than in-store. So far, it’s unclear how this trend is affecting hiring for warehouse jobs, according to Citi (C) economist Andrew Hollenhorst.
“In short, the labor market is now better than the grim mid-year predictions, but weaker than headline measures suggest,” Kolko said.
The Bureau of Labor Statistics will release the November jobs report on Friday at 8:30 am ET.
