Outside the agricultural sector, 140,000 jobs were cut in December. The unemployment rate remains unchanged at 6.7%. In the final month of 2020, the US labor market is taking another beating. In the USA, too, the number of new infections, which has risen massively over the past few weeks, has been met with restrictions. Be it at the state level, be it at the city level. The downsizing fits into the picture of recent closings of restaurants and retail stores. In view of the massive job cuts in March and April and the reluctance to create jobs since then, the renewed job cuts hurt twice.
The unemployment rate does not reflect the actual situation on the US labor market. In the wake of the pandemic, people withdrew from the labor market. The participation rate, i.e. the proportion of people who have a job or are looking for a job, is relatively low compared to the pre-crisis level. Adjusted for this effect, the unemployment rate would be over 9%. The US labor market is therefore still in a difficult position. The adoption of a second US aid package before Christmas was accordingly urgent, because the people affected by unemployment are dependent on state support due to poorly equipped social systems.
Meanwhile, the starting situation is favorable for US President-elect Joe Biden. If herd immunization of the US population occurs later in the year, new jobs are likely to be created on a large scale. The restaurants alone then need an army of service staff and cooks. So Joe Biden is likely to have an economic tailwind right from the start of his term in office. However, the future president must also succeed in converting the jobs affected by structural change into new positions. His planned infrastructure program and the transformation of the US economy into a green economy is an opportunity for this. If he succeeds, he could calm the nation down.
The US Federal Reserve held back from providing any further aid in December. It is possible that the top monetary authorities feel obliged to go a step further because of the poor data material.
Live stream on December 14, 2020 from 6 p.m .:
With Hans-Werner Sinn, Former President of the Ifo Institute: Corona and the miraculous increase in money in Europe
– Here is the stream! –