The case for another stimulus package to help Americans trudge through what Dr. Robert Redfield, director of the U.S. Centers for Disease Control and Prevention referred to as “ the most difficult time in the public health history of this nation” was strengthened Friday by what many economists described as lackluster jobs report.
In total, the U.S. regained 245,000 jobs in November — lowering the unemployment rate to 6.7% from 6.9% in October.
“250,000 would be a decent number in normal times, but we’re not in normal times. We still have 10 million jobs that we have to make up to recover from the COVID recession,” said Ernie Tedeschi, a former economic advisor to the Obama administration.
What’s more, the number of people who left the workforce but still want a job last month rose by 448,000, bringing the total to 7.1 million. These individuals aren’t factored into the country’s unemployment rate because they didn’t actively look for work or were available to work in the last four weeks.
“If we kept up the pace of adding 245,000 jobs a month that means it would take us until the end of 2023 just to get back to where we were in February,” Tedeschi told MarketWatch.
That’s why he and other economists are calling on lawmakers to pass a stimulus package as soon as possible to help Americans weather the pandemic until a vaccine is widely distributed.
Since lawmakers returned to Washington after Thanksgiving, there has been growing bipartisan support for a $908 billion stimulus package that calls for $300/week in enhanced unemployment benefits, $288 billion in assistance for U.S. businesses and $160 billion for state and local governments.
House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer have all endorsed the package. Pelosi said Friday that talks on a COVID-19 relief package have “momentum,” and that the weaker-than-expected November jobs report gives more reason for Congress to act.
However, the $908 billion package doesn’t include a second round of direct stimulus checks.
Based on Friday’s jobs report, Claudia Sahm, a former Federal Reserve economist, said it would be a mistake to not include checks in a forthcoming stimulus package.
“Stimulus checks are really popular and really effective. There is more and more research coming out that dollars for dollar people spend this. If people spend money, businesses have money, and then they don’t have to layoff people.”
“This jobs report is the straw that broke the camel’s back,” she said. Stimulus talks resumed largely because of the exponential growth in new coronavirus cases, deaths and hospitalizations in the past month, Sahm added. “On top of that, the economic data says this is really going to get worse so it comes down to how can [lawmakers] not act?”
In the coming weeks some 12 million Americans will stop receiving unemployment benefits, the CDC’s nationwide eviction moratorium will expire, student loan borrowers will resume payments on their debts, and other financial relief programs will expire.
“It’s kind of devastating,” said Elise Gould, a senior economist at the Economic Policy Institute, a left-leaning think tank.
“We were already in this terrible situation now the caseloads are rising and the relief is going to end. What that means for the economy moving forward is, I hate to say it, but we could be seeing a double-dip to the recession.”
Friday’s jobs report made it clear to Gould that it is “absolutely necessary to reinstate and extend all the unemployment programs.” That would include Pandemic Unemployment Assistance, which through the CARES Act, enabled gig workers, self-employed workers and independent contractors to qualify for unemployment benefits.
Absent of Congressional action, that is set to expire at the end of this year.
“Schools are still closed, people can’t go into work and we still want people to be protecting their health and staying home, so we just need to pay people to do that.”
“We shouldn’t be overly optimistic about when we’re going to see wide vaccine distribution,” Tedeschi, managing director and policy economist for Evercore ISI, an investment-banking advisory firm, said. “We should calibrate this fiscal relief to get us not, you know, three months into the year but well into the year under the assumption that it might take some time for people to get a vaccine.”