Monday, December 7, 2020

US labour market deteriorating – health and economic policy failures — Bill Mitchell

Last month, I noted that with the virus infections in the US increasing rapidly and renewed lockdowns almost inevitable combined with the lack of fiscal support from government, labour market conditions would probably deteriorate in November. I thought the US faced an uncertain and pessimistic future. The latest data reveals that assessment was accurate. On December 4, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – November 2020 – which reveals a deteriorating situation. Employment growth has slowed dramatically and participation fell by 0.2 points, which is the only reason that the unemployment rate fell by 0.2 points. Once we take into account the decline in the labour force, we realise that the fall in unemployment is illusory – it just means that workers who would normally be considered unemployed are now being classified as outside the labour force (that is, as hidden unemployed). The impasse at Congress on the the size and design of the next tranche of fiscal support is not helping. And then the data shows the lax health policy is allowing the virus to run out of control and how that plays out is anyone’s guess. I suspect a nation has to get the health problem sorted before they can really sort out the economic problem. The US appears to be going in the opposite direction to that. I doubt it will turn out well....
Consequences of political gridlock in the face of an exogenous shock. Paralysis.

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

10 comments:

Peter Pan said...

No gridlock when it comes to military spending... how curious.

Andrew Anderson said...

The slavers need protection and profits and the slaves need jobs - a win-win via military spending.

Andrew Anderson said...

Of course the protection may prove to be an illusion as French aristocrats learned the hard way circa 1793.

Matt Franko said...

This holding it up again:

https://money.yahoo.com/coronavirus-liability-protection-for-companies-stimulus-deal-215613861.html

Mike Norman said...

Hard to grow employment when things are shut down.

S400 said...

Maybe hard to grow employment but easy to destroy. You could make it possible to keep the employed with help from government.

Matt Franko said...

S, how can you go to work if you are being prevented from going to work?

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Unknown said...

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S400 said...

“how can you go to work if you are being prevented from going to work?“

Who said anything about going to work. It’s about keeping the work force until things are back again.