The December jobs report was the first time since the plunge in April when the U.S. lost jobs. In the release from the Bureau of Labor Statistics, the country lost 140,000 jobs, bad news and a hiccup in the economic recovery that may continue for a while.
"We expect the double-dip pattern to continue into the new year as the pandemic remains rampant," wrote TD analysts in a note Friday.
But economic analysis shows one silver lining that’s been present since the beginning of this messy pandemic: the problem is the virus, not the underlying economy. And with vaccines in distribution, a fix is on the way.
The coronavirus has not affected sectors equally, since the main countermeasure has been social distancing. So service-oriented jobs like those in the hospitality and restaurant industry were especially hard hit – the category lost nearly half a million jobs last month after gaining 340,000 jobs between October and November; and the industry group remains nearly 4 million payrolls short of its February levels.
But at the same time, as Morgan Stanley wrote in a research note Friday, December saw job growth of around 403,000 jobs excluding hospitality and leisure, a signal that the economy is far from being in terrible shape.
Furthermore, as the analysts noted, most of the job losses, for now at least, appear to be temporary, “suggesting the December data marks just a near-term pause in the labor market recovery.”
However, the silver lining still doesn’t make things any easier in the near-term. Pantheon’s Ian Shepherdson called the release “grim.”
“The leisure sector can’t begin to recover until Covid restrictions can be lifted, and that seems unlikely to start before late February at the earliest, assuming we’re right in our view that cases will start to fall later this month, reducing the pressure on hospitals next month,” he wrote.
As TD writes, the issue in hospitality “undoubtedly reflects new COVID restrictions.”
There is some optimism to be found though: These industries aren’t hurting because people don’t have money or the desire to eat out. They absolutely do. After almost a year of pandemic, people desperately want to dine out and return to their favorite bars, restaurants, cruises, and hotels. But restrictions or fear of a virus that is currently killing 4,000 people per day in the U.S. keeps them home.
Though a post-Covid travel boom might be overly optimistic in 2021, there’s likely to be a post-Covid restaurant and bar boom on the table for most Americans eager to get out of the house once the virus is licked.
Knowing a vaccine is coming is one thing, however. As Shepherdson pointed out, it’s going to take a while for the measures to kick in at scale and truly impact the economy, which is why most of the news was bad around today’s unemployment report. And even when people are vaccinated the job won’t be over.
“We expect recovery to resume within a few months, with the help of vaccines and fiscal stimulus, although we also expect the labor market to show significant net weakening for several years,” TD analysts wrote.
Shepherdson pegs it as far out but a little sooner, writing that “a full recovery will probably have to wait until the second half, when we expect a massive wave of post-Covid demand.”