Bill Mitchell — US labour market recovery has ended as health problem intensifies

It has been clear that with the virus infections in the US increasing rapidly and with the lack of fiscal support from government, that the labour market conditions would probably start to deteriorate after a brief period of recovery following the first blush with the virus. I have been predicting that since December 2020. The latest data reveals that assessment was accurate. On January 8, 2021, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – December 2020 – which reveals a deteriorating or static situation, depending on the weight one gives to the payroll data relative to the household survey. Payroll employment fell by 140 thousand. In terms of the household survey, with employment and the labour force hardly moving, unemployment and the unemployment rate was unchanged. While the signals are a little confused, the data is showing the recovery has ended as the health crisis intensifies. I consider that the US will have to stabilise the health situation before they will be able to sustain any economic recovery. The US appears to be going in the opposite direction to that...

Fiscal flows have been strong and the deficit expanding. However, fiscal policy has not be tightly targeted, and, as Bill notes, economic activity is being hampered by the pandemic regardless. The pandemic must be brought under control for economic conditions to improve. In the meanwhile, government must make provision for the interim so keep the country afloat. This will require targeting areas of weakness rather than a shotgun approach.

Bill Mitchell – billy blog
US labour market recovery has ended as health problem intensifies
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia