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A waitress takes customers' orders in the outdoor seating area of a restaurant on Jan. 28, 2021 in Los Angeles. Valerie Macon/AFP via Getty Images
COVID & Unemployment

U.S. economy adds 49K jobs as unemployment falls to 6.3%

Associated Press Feb 5, 2021
A waitress takes customers' orders in the outdoor seating area of a restaurant on Jan. 28, 2021 in Los Angeles. Valerie Macon/AFP via Getty Images

U.S employers added just 49,000 jobs in January, a sign that that the viral pandemic retains a tight grip on the economy nearly a year after it triggered a painful recession.

The tepid increase followed a decline of 227,000 jobs in December, the first loss since April. The unemployment rate for January fell from 6.7% to 6.3%, the Labor Department said Friday. About half the drop occurred because some of those out of work found jobs, while others stopped looking for work and were no longer counted as unemployed.

Friday’s figures reflect a faltering job market, slowed by a viral pandemic that is still causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact. Nearly 10 million jobs remain lost to the pandemic.

Some states and localities re-imposed restrictions on businesses in December as cases spiked. Some of those restrictions were loosened in January, though perhaps not in time to affect the jobs report, which measures employment in the middle of each month.

As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.

The hardships that millions of Americans are suffering trends have fueled President Joe Biden’s push for a $1.9 trillion stimulus package, which would provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits. The package would also extend two federal jobless aid programs, from mid-March through September.

The damage to the job market since March has widened financial inequality in the United States, especially hurting women and people of color. At the same time, Americans fortunate enough to have kept their jobs have amassed $2.3 trillion in savings — double the pre-pandemic total. That enlarged pool of savings could fuel a rapid rebound in spending as business restrictions are lifted and more Americans become more confident about shopping, dining out and traveling.

Economists increasingly suggest that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions. Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.

Some hopeful signs have emerged recently to suggest that the economy might be picking up a bit. Auto sales rose solidly in January. And a gauge of business growth in the service sector picked up to its highest level in two years. It also showed that services firms added workers last month. A separate measure of manufacturing indicated that factories are also expanding. So is spending on home construction.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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