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HEALTH-VIRUS-US-ECONOMY-EMPLOYMENT-UNEMPLOYMENT
Stalled stimulus talks make for uncertain US jobs report
WASHINGTON, Sept 4, 2020 (BSS/AFP) – Setbacks in the US quest to reopen the
economy and a deadlock in Congress have cast uncertainty on the labor market
ahead of a key government jobs report Friday.
The world’s largest economy has unraveled in recent months amid a
terrifying Covid-19 outbreak that caused more than 186,000 deaths and tens of
millions of layoffs as businesses shut down to stop the spread of the virus.
Without new stimulus from Congress that many say is sorely needed, and
faced with continued high rate of layoffs, analysts are split as to what to
expect when the Labor Department releases its August unemployment rate and
hiring totals on Friday.
The July report showed firms added 1.8 million nonfarm jobs, and the
unemployment rate dipped to 10.2 percent, and while the jobless rate is
expected to continue to decline in August — the magnitude of the drop
depends on how you read the hazy data coming from an economy facing its worst
downturn in a generation.
Mickey Levy of Berenberg Capital Markets told AFP he expected a
surprisingly good report with as many as 1.6 million jobs added, pointing to
the declining numbers of people filing new claims for unemployment benefits
each week.
He also noted “other economic indicators like retail sales and durable
goods orders (that) have continued to improve despite the dampening impact of
the second wave of the pandemic.”
However, Ian Shepherdson of Pantheon Macroeconomics said in a research note
he only projects a gain of 750,000 new jobs based on surveys showing
unremarkable hiring in August in both the public and private sectors.
“The key point here is that momentum in employment growth has slowed
substantially, and the early signs for September are deeply discouraging,” he
said.
– Safety net, gone –
Tens of millions of jobs were lost and the US saw unemployment spike to
14.7 percent in April as business shutdowns took their toll on the economy,
climbing from a historically low rate before the pandemic hit. And a report
Thursday said job cuts through August already surpassed the previous full-
year record.
But despite fears the rate would climb even higher, it has declined in
recent months as state and local governments tried to get businesses open
again, even as the virus outbreak in the country became the worst in the
world.
Analysts credit the $2.2 trillion CARES Act spending package that Congress
approved in late March which supported consumption by giving jobless people
an extra $600 per week, while also providing loans and grants to keep small
businesses afloat.
But those provisions expired at the end of July, and lawmakers in
Washington have failed to reach a deal to extend them despite lengthy
negotiations.
A report Thursday said job cuts through August already surpassed the
previous full-year record, with airlines especially hard hit, while the Labor
Department has reported an average of more than one million new claims for
jobless benefits filed each week in August.
William Spriggs, chief economist of the AFL-CIO union federation, told AFP
that points to a weak monthly report. He predicted little movement in the
unemployment rate in August and less than one million new jobs added, the
consensus forecast for a 1.4 million surge.
“The fact that we still have all these people in the system looking for
benefits just shows we have a large number of people not attaching to the
labor force,” he said. “We’re looking at long-term unemployment as a huge
issue.”
BSS/AFP/GMR/0912 hrs