America lost a staggering 140,000 jobs in December

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America lost a staggering 140,000 jobs in December

America’s job market recovery ground to a halt in December, making President-elect Joe Biden’s task to repair the economy that much harder.

The US economy shed a staggering 140,000 jobs last month, the Bureau of Labor Statistics reported Friday — a far worse outcome than economists predicted.

The unemployment rate remained flat at 6.7%, marking the first time the rate hasn’t improved in seven months.

The increase in Covid-19 infections, as well as the virus-containment measures states have had to take, are at the root of the worsening labor market conditions, the BLS said, ending a bleak year for workers on a sour note.

The leisure and hospitality industry — which was hit hardest by the pandemic because of the face-to-face nature of the business — lost nearly half a million jobs in December, most of them in restaurants and bars. The industry has shed 3.9 million jobs, or 23.2%, since before the pandemic.

However, the concentrated nature of the job losses mean that the recovery in other areas of the economy is still going, said Sal Guatieri, senior economist at BMO, in a note to clients. Retail trade, for example, added 121,000 jobs in December.

Even so, the US economy is far from its pre-pandemic strength and is still down 9.8 million jobs since February.

It took the labor market more five years to recover from the job losses of the 2008 financial crisis, which were less severe.

All of this means Biden has his work cut out for him when he enters office later this month.

While the stimulus package that was signed into law in the final week of 2020 extends pandemic-specific benefits and re-expands unemployment aid by a weekly $300 until mid-March, more work likely remains to be done.

The Democratic sweep of the Senate, which gives the party both the White House and Congress, paved the way for a swift implementation of Biden’s economic agenda, which will likely include more stimulus in the near-term. Biden also plans to pour dollars into the infrastructure and clean energy industries to create millions jobs in the medium and long-term.

But the new administration will also have to tackle the here and now: The jobs recovery, which was buoyant in the summer, has slowed down for months.

The employment-population ratio stood at 57.4%in December — flat from the previous two months, meaning that real improvements, proportionate to the population, have been missing for the entire fourth quarter.

Workers who have lost their jobs through no fault of their own still need the government’s help to make ends meet. The BLS reported that 15.8 million people were unable to work in December because their employer closed or was negatively affected by the pandemic, an increase of 1 million from November.

Economists expect job growth to be tepid at the start of this year and until the virus is brought under control through vaccinations or social restrictions. But ultimately, the recovery should find a more steady pace.

“While these bleak numbers represent a weak handoff to 2021, the labor market recovery is expected to strengthen over the spring and summer as vaccinations lead to a gradually improving health situation,” said Gregory Daco, chief US economist at Oxford Economics.

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