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The Expected Double-Dip Recession Has Arrived
Why Wouldn’t 2020 End with a Terrible Jobs Report?
The Bureau of Labor Statistics released December 2020 employment data today, indicating that America lost 140,000 jobs on net during a tumultuous year’s final month. The nation has officially lost the economic momentum it had been generating since May, with retail sales, employment and many other indicators moving in the wrong direction. Have worse things happened over the past three days? Yup, but even economists tend not to grade the nation’s employment performance on a curve.
After last month’s jobs report, I said “we’re plummeting toward a second recession.” The consensus forecast was that the nation added a few jobs in December. Nope.
If you need a silver lining (and let’s face it, you do), employment estimates were revised upward for both October and November by a combined 135,000 jobs. Feel better now? Nope.
Do we know why this is happening? Yup. We are now in the midst of a third spike in COVID-19 cases. While much focus has been placed on renewed economic lockdowns, available research suggests that much of the negative impact associated with the pandemic results from people voluntarily disengaging from economic activity for fear of infection.
The virus will lose this battle, but it will have taken many down with it—both lives and livelihoods. Thank you Pfizer/BioNTech, Moderna and others for finding ways to combat this. We have also learned that these vaccines are able to neutralize the mutated strains that have become commonplace in the U.K., South Africa and elsewhere. Accordingly, the expectation of a boisterous economic rebound during 2021’s latter half remains firmly in place.
You can read my insights on the construction industry’s employment situation at Associated Builders and Contractors.
Three Key Takeaways
The hardest hit employment category in December was—wait for it—leisure and hospitality. Well of course it was. The embattled segment shed almost 500,000 jobs for the month, and the food service and drinking place subsegment alone accounted for 372,000 of those losses. Any of you who find yourselves in a fortuitous position are hereby urged to buy gift cards and carryout from your local restaurants as much as possible.
It’s no secret that this pandemic has disproportionately impacted minority communities. Employment among Hispanics/Latinos declined by 252,000 in December, while Asian employment declined by 40,000 and black/African American employment declined by 26,000. White employment increased by 38,000 net new jobs in December.
E-commerce and supercenters are thriving. Warehouse clubs and supercenters have added 172,000 jobs since the end of 2019, an increase approaching 9%. Warehousing and storage has also added about 9% to employment levels. The shift toward e-commerce has expanded demand for couriers and messengers (those intrepid package delivers), a segment that has added 223,200 net new jobs over the past year, a 26.4% increase.
What to Watch
Vaccine distribution has thus far been underwhelming. The expectation is that America will eventually get it right.
We also received a third round of major stimulus. That will further spring-load the economy for its eventual boom later this year. More stimulus is forthcoming in the near-term with virtual certainty.
Our 2021 Webinars and Presentations
We’re thrilled to announce our 2021 presentation, Anirban Basu and the Chamber of Data. If you’re interested in having me give this wizardly economic forecast to your stakeholders, contact us at email@example.com.