Worrisome jobs report means Biden will be judged on handling of economy in his first days, not traditional 100 days
The first 100 days of a new president’s administration has become a benchmark of accomplishment – a measure of what a new U.S. president can get done when there’s fresh perspective and a bold agenda. For incoming President Joe Biden, the dire state of the economy means he likely won’t be afforded that luxury.
“The economy is in danger of sliding backwards here if the blue wave fiscal stimulus spending isn’t brought forward quickly in the first days of the Biden administration,” Chris Rupkey, MUFG’s chief financial economist, wrote in an investor note after the December jobs report came out. “The Biden administration will be judged [by] what they do to support the economy in the first two weeks rather than the traditional measure of the first 100 days.”
The U.S. economy’s recovery is deteriorating amid a rise in coronavirus outbreaks across the country and a slow vaccine rollout. For the first time in eight months, the economy lost jobs, shedding 140,000 jobs in December.
These disappointing employment numbers hearken back to April, when the broad business shutdowns induced by the coronavirus hit the job market. A record 20.5 million jobs were lost that month as the unemployment rate reached 14.7%, its highest level since the start of the pandemic.
“For Main Street America, the worry and desperation is growing worse by the day. The economic recovery hit a wall and now instead of rehiring, companies have resumed firing. Recession is back if you are unemployed and the new job losses signal more firings and layoffs are still to come,” wrote Rupkey. “It is almost unprecedented to have jobs turn back down after a recession.”
With Trump’s presidency in its final stretch, boosting the economy and combating the pandemic are the Biden administration’s primary responsibilities on Jan. 20.
With the presidency, House, and Senate all under Democratic control following Georgia’s runoff elections this week, expectations for another round of fiscal stimulus to aid the U.S. economy are high. (Biden told Georgia voters $2,000 relief payments would be sent to Americans if Raphael Warnock and Jon Ossoff won their Senate races.)
Bank of America, for instance, expects another $1 trillion infusion. “The economy has been jolted by $900 billion in stimulus and another round is likely, given that the victories of Raphael Warnock and Jon Ossoff in Georgia flipped the Senate to a Democratic majority,” Bank of America economist Michelle Meyer wrote in a recent report. “We believe another stimulus package could be passed in the ballpark of $1 trillion.” Congress passed a $892 billion COVID-19 aid package at the end of December, which included $600 payments to most Americans and more aid for the unemployed.
When Biden takes office, the U.S. will be facing a 6.7% unemployment rate with about 10 million unemployed. “Keep in mind that over 5 million [people] have dropped out of the labor force and have stopped looking because there is no work out there, so the true unemployment rate is about 15%,” Rupkey wrote.
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