The U.S. economy shed 140,000 jobs in December. That’s the first monthly job loss in eight months. Economists had expected the economy to pick up a very modest 50,000 jobs in the month.
The official unemployment rate held at 6.7%. The U-6 unemployment rate, which counts among the unemployed discouraged workers who have stopped looking for jobs and workers in part-time jobs who would like full-time work was 11.6%. That was steady with November’s 11.6% but up from the 6.8% rate in December 2019.
The biggest losses, no surprise, came in restaurants, bars and other businesses hit hard by fresh pandemic restrictions. In December, employment in leisure and hospitality declined by 498,000, with three-quarters of the decrease in coming in food services and drinking places Employment also fell in the amusements, gambling, and recreation industry (a drop of 92,000 jobs) and in the accommodation industry (a loss of 24,000 jobs.) Since February, employment in leisure and hospitality is down by 3.9 million, or 23.2%.
The stock market wasn’t particularly upset at the deeply negative surprise. At the close today, December 8, the Standard & Poor’s 500 was up 0.55% and the Dow Jones Industrial Average was ahead 0.18%. The NASDAQ Composite gained 1.03% and the NASDAQ 100 moved up 1.28%. The small cap Russell 2000 fell 0.44%.
Because, first, outside the ravaged leisure and hospitality sectors, retail, professional and business services, construction and manufacturing all posted solid job gains. To Wall Street that indicates that the economy is in a position to bounce back once vaccines control the pandemic. This quote to Bloomberg is indicative, I think, of this stance: “Outside of consumer-facing sectors the remainder of the economy continues to show resilience,” said Michael Gapen, chief U.S. economist at Barclays. “It does show that if we can get control of the pandemic, then we can restore economic activity and labor market conditions over the course of this year. It’s a pandemic-driven number, a pandemic-driven composition.”
And, because, second, bad news on the real economy is seen as good news for continued low interest rates and the Federal Reserve’s continued purchase of bonds at something like the current rate of $120 billion a month. Coming after a week when some Fed officials mentioned the possibility of cutting back on Fed bond purchases sometime, today’s bad job news is actually reassuring to a market that at current levels requires the continuation of super-easy monetary policy from the Fed.
