The already sputtering economic rebound went into reverse in December, as employers laid off workers amid rising coronavirus cases and waning government aid.
U.S. employers cut 140,000 jobs in December, the Labor Department said Friday. It was the first net decline in payrolls since last spring’s mass layoffs, and though the December loss was nowhere near that scale, it represented a discouraging reversal for the once-promising recovery. The U.S. economy still has about 10 million fewer jobs than before the pandemic began.
The December losses were heavily concentrated in leisure and hospitality businesses, which have been hit especially hard by the pandemic. The industry cut nearly half a million jobs in December, while sectors less exposed to the pandemic continued to add workers.
The unemployment rate was unchanged at 6.7%, down sharply from its high of nearly 15% in April but still close to double the 3.5% rate in the same month a year earlier.
“We’re losing ground again,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “Most notably, this is still very much a low-wage recession, and the losses were where we first saw them when the pandemic hit.”
Hiring has slowed every month since June, and the economy lost more than 9 million jobs in 2020 as a whole, the first calendar-year decline since 2010 and the worst on a percentage basis since the aftermath of World War II.
Congress last month passed a $900 billion relief package that will provide temporary support to households and businesses and could give a boost to the broader economy. And in the longer run, the arrival of coronavirus vaccines should allow the return of activity that has been suppressed by the pandemic.
But the vaccine and the aid came too late to prevent a sharp slowdown in growth.
“We did have a pullback in the economy,” said Michelle Meyer, head of U.S. economics at Bank of America. “If stimulus was passed earlier, maybe that could have been avoided.”