It’s not working anymore
We added 245k jobs in November after adding 610k jobs in October and as many as 4.8m in June. The unemployment rate fell to 6.7%, though it’s more driven by people dropping out of the labor force all together (not a good thing). The number of workers that have been unemployed for more than six months (long-term unemployment) is sitting at 3.9m. These long-term unemployed workers represented 37% of all unemployed workers in November, which is up from just 19% in September, and compares to the historical peak in April 2010 of 45%. We’re still about 10m jobs short of pre-COVID levels, which is worse than the depths of the Great Depression.
Moral of the story: Job gains are going to be difficult through the winter as we see shut-downs and retailer closures. Even if we consider November’s job gains to be the normal rate going forward, it would take another four years to get back to pre-COVID levels. Here’s to hoping wide-spread vaccine distribution kickstarts the labor market recovery.
Guys it’s getting scary out there. By the middle of this week, there were over 100k COVID-19 hospitalizations across the country and the medical system is not just worried about running out of beds, but also running out of staff. Counteracting this negative news throughout the week, we heard of UK’s approval of the Pfizer COVID-19 vaccine and, more importantly, progressing conversations in Congress about the next stimulus package. The stimulus package would include small business aid, state and local government relief, supplemental unemployment benefits through March, funds for vaccine distribution as well as testing and contact tracing, and funds for transportation and education.
Moral of the story: The market, which found new highs throughout the week, is basically counting on this stimulus to bridge the economy between where we are today and where we will be once vaccine distribution begins. Hopefully Congress can get something passed before the end of the year when existing benefits expire or else we could see the current market optimism fade.
Manufacturing no more growth
Even though manufacturers continued to expand in November, the ISM Manufacturing Index slipped almost 2 points to 57.5 and came in below expectations. Given the surge in COVID-19 cases, manufacturers were having a difficult time keeping plants open and retaining or hiring workers.
Moral of the story: The manufacturing sector has rebounded better than most this year but the rising cases are starting to take a toll. We’re likely to see deceleration in this sector over the next few months until the current surge in cases begins to recede, which is only going to add to the struggling economy as new government restrictions start popping up around the country.