Global Economics – January 8, 2021
However bad 2020 was, 2021 has gotten off to an even worse start. Or at least an uneven start. Yes, January 6 and the assault on the Capitol was a stark day of dishonor for the US, but it didn’t slow down the Dow which rose 1.4 percent, a Wednesday gain that followed voting in Georgia and Democratic control of the Senate and, more fundamentally, a gain that reflected confidence in the structural integrity of the American political system. Though not as unpleasant as Wednesday, Friday also had its bumps with the day’s data raising the question whether recoveries in the US and Canada may already be fizzling.
The Global Economy
Nonfarm payrolls in the US fell 140,000 in December, far below expectations and ending a seven-month streak of gains. Decreases occurred both in the private and government sectors, which recorded respective declines of 95,000 and 45,000. Losses were concentrated once again in leisure and hospitality where, in destruction once again centered at restaurants, payrolls fell a staggering 498,000 in the month. Leisure and hospitality has now lost 3.9 million jobs during the pandemic. Reflecting this highly disproportionate hit to this lower-paid sector, average hourly earnings shot 0.8 percent higher in the latest evidence of an increasing have and have-not economy. December’s report, in fact, wasn’t one sided at all as professional and business services, retail trade, construction, transportation and warehousing, and manufacturing all posted gains. Another plus was a sharp upward revision to November where nonfarm growth now stands at 336,000. But prior months are very old news amid new lockdowns and the emergence of a more transmissible strain of the virus. Vaccines aside, the employment situation could get worse before it gets better.
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