Economic Forecasts

Jobs: Large Layoffs Because of Virus Surge, But Positive Signs, Too

Kiplinger’s latest forecast on jobs

The virus surge hit the restaurant, hotel and amusements/recreation industries hard, with temporary layoffs responsible for the loss of 140,000 jobs in December. Other sectors sensitive to the pandemic also showed losses: Elder care facilities, transit, moviemaking and local government.

On a positive note, job gains were widespread in most other industries. That indicates an improving economy in general. Retail, delivery workers, professional and business services, temporary help, health care, manufacturing and construction all registered large gains.

Other positive signs: There were fewer permanent job losses, so the unemployment rate held steady at 6.7%. There were fewer workers forced to work part time because of slack conditions. Finally, there was a jump in the number of people starting to look for work again after being out of the labor force. If the vaccines work, expect the labor market to heal rapidly in 2021.

The jobless rate may bounce up a few times this year, but the overall trend will be down as the pandemic recedes. There are still 5.5 million jobless people who are counted as having dropped out of the labor force since Feb. As the pandemic subsides, many of those folks will likely be looking for work. If they do, it could cause the jobless rate to drop more slowly, since they’ll then be counted as officially unemployed. But more people looking for work shows optimism about finding a gig, which is a good thing. By the end of 2021, figure on the unemployment rate falling to 5.3%.

The pandemic resurgence also forced more workers to telecommute again. The share of workers telecommuting rose to 23.7% in December from 21.8% in November.

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