October may be the one bright light in what has been an intense political season,and one in which the economy has been the main plank in the reelection campaign of President Donald Trump, yet Friday’s report issued by the U.S. Labor Department shows some improvement, to the tune of 638,000 jobs, a slight increase from an expected 6000,000 predicted by economists, and a drop in the unemployment rate from 7.9 percent to 6.9 percent added to a level of optimism for some.
The good news is that more than half of the 22 million jobs lost since February, before the COVID pandemic hit, but that still leaves 11 million jobs unfilled, and a large increase of those that suffer long term unemployment, defined as 27 weeks, or longer, and that number hit at 3.6 million making the plea for Congressional help, a much needed action to keep the American economy on a forward trajectory.
“Millions of unemployed workers have had a harder time paying bills since an emergency federal program paying $600 a week in additional benefits expired at the end of July. Another set of federal jobless benefits will last only through the end of the year,” reported The New York Times.
While some will say the good news is proof of the attributes and work of Trump, the reality is that, “It’s better than expected, but we’re starting to see headwinds,” Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago, said of the October report. “The drop in the unemployment rate is welcome news, but there are still over 11 million unemployed workers.”
The good news is that the private sector added 906,000 jobs, but the real star of the show is food and beverage where there was a gain of 192,000 jobs, but since the pandemic, the loss is at 3.5 million, from the 4.8 total employment in April.
That gain is mitigated by the oncoming cold weather and the loss of outside dining, but still hampered by the pandemic that has continued to eat away at gains, making the need for federal help all the more needed, and now that Joe Biden has defeated Trump, the gainsay of help will be seen, despite the effort of the GOP Senate majority.
Cailin Birch, global economist at The Economist Intelligence Unit, in a Friday analysis for The Hill said that, "In the absence of another comprehensive stimulus bill before 2021, many companies may find it increasingly hard to survive. We do not expect to see significant job gains in the coming months, as a result.”
With an increase in COVID cases in the South and the Midwest part of the nation,and “two straight days of more than 100,000 new cases and epidemiologists warning about the worst yet to come,” challenges are now reappearing for what, for some, was a drift forward some level of activity, but Federal Reserve Chairman Jerome Powell called "particularly concerning" in a Thursday press conference, according to The Hill.
“It does seem likely that people who have maybe begun to engage in activities that they hadn't—flying, staying in a hotel, going to restaurants, going to bars and things like that — that they may pull back in a situation where suddenly cases are everywhere in your city, your state, your community,” Powell said.
“That could weigh on economic activity,”
Taken as a whole October seems to show improvement for some, say economists and academics, yet while “The unemployment rate dropped more than expected, and on the back of an increase in the labor force and no increase in permanent layoffs,” said Daniel Zhao, a senior economist at Glassdoor who said the report was a positive one. Still, he said, the pandemic remained a major concern as the virus continues largely uncontrolled.
Caution therefore seems to be the watchword, and that is seen, despite gains, and “Leisure and hospitality is still short 3.5 million jobs; retail is down by about 500,000 jobs. Health care and social assistance, which added 79,000 jobs, is down 950,000 from February. Manufacturing gained 38,000 jobs but remains 621,000 lower than February,” reported The Washington Post.
Of concern, noted “Kate Bahn, an economist at the Washington Center for Equitable Growth, said she was concerned that the gains were modest in industries that could be vulnerable as the pandemic results in more layoffs and restrictions.
“These gains are really limited as the pandemic is surging and we’re heading into winter,” she said. “It’s better than expected, but there’s a lot of evidence that it’s still a limited recovery that is really uneven and has exacerbated a lot of inequality that existed before the crisis.”
The labor-force participation rate held a slight increase to 61.7 percent, up by 0.3 percentage points — but well below pre-pandemic levels from February and those stuck in part-time work ,while wanting full-time work, rose by 383,000, to 6.7 million.
Yahoo Finance, perhaps hit the nail on the head when they noted: “The October jobs report also continued to reflect a worrying trend seen in the past several months’ worth of data: Many individuals’ temporary furloughs or layoffs have become permanent. The number of so-called permanent job losers stayed about steady at 3.7 million in October, for a sum of 2.4 million above the level from February.”
“We’ve now seen tens of thousands of cuts in industries outside Entertainment and Retail, indicating the impact is spreading,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc., who also added, “However, as case counts rise and more jurisdictions impose stricter enforcement, and stimulus money dries up with no coming legislation, uncertainty is likely guiding many company decisions on retaining workers.”
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