U.S. labor market remains vulnerable to COVID-19

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Unemployment benefit claims increased for the second week in a row in the United States, a signal that the economic recovery is almost at a standstill, affected in particular by the new restrictions imposed in the face of the resurgence of Covid-19.

This situation puts pressure on Congress to quickly adopt a new stimulus package called for by Democratic President-elect Joe Biden, economists and bosses.

Discussions between Republicans and Democrats have stalled, mainly because of the amount of the envelope.

Between November 15 and 21, 778,000 people registered as unemployed, 30,000 more than the previous week.

The United States has a little over 6 million unemployed, a figure whose slight decrease masks the fact that a significant number of people leaving the official figure remain unemployed, but have switched to specific assistance programs in the face of the pandemic.

The total number of beneficiaries of unemployment or another of these aids, on the other hand, climbed in early November, to nearly 20.5 million people.

However, this aid ends on December 26, and without rapid action from Congress, 12 million unemployed people could find themselves without resources on Boxing Day, according to studies.

The labor market appears particularly vulnerable to the second wave of the COVID-19 epidemic, which is followed by a series of new activity restrictions. Public schools have closed their doors, in New York for example, the economic capital of the country, forcing parents to slow down their activity as well. It is also a blow to restaurants, which are often forced to close their doors earlier in the evening.

The Thanksgiving feast, celebrated on Thursday, could worsen the situation: many Americans are indeed meeting with their families to taste the traditional turkey, despite calls from the authorities not to meet.

Last weekend was even the busiest since the start of the pandemic at US airports, which handled more than 3 million passengers.

Islands of hope

This upsurge in the virus caused US consumer confidence to drop in November, according to indices measured by the Conference Board and the University of Michigan. It could also lead to a contraction in GDP, unless there is a new economic support plan.

The White House, in the midst of a transition between Donald Trump and Joe Biden, has given Congress free rein, and elected officials have resumed discussions, but it is difficult to predict the outcome.

The Democrats, who have been pleading for months to water widely households, small businesses, but also local communities whose finances have been damaged, could agree to sign a quick compromise, with targeted measures, as the Republicans want .

Then instructs the new Biden administration to develop a broader economic aid plan, deemed essential and urgent by many economists.

This will undoubtedly be the first site for the future Secretary of the Treasury, who should be Janet Yellen, according to sources close to Joe Biden’s team. Former president of the powerful Central Bank (Fed), Ms. Yellen is a progressive economist, unemployment specialist and former president of the Fed.

This task promises to be Herculean because in addition to unemployment, the gradual expiration of the aid put in place in the spring to deal with the pandemic, as part of the gigantic Cares Act stimulus plan, reduced the income of American households in October. compared to September. And the savings rate, which reached 33.7% in April, continued to decline, falling to 13.6%.

As a result, spending slowed down.

The promise of a vaccine against COVID-19, however, maintains some hope. US officials predict a total of 40 million doses before the end of the year.

News that supports the New York Stock Exchange: its flagship index, the Dow Jones, for the first time ended Tuesday above the symbolic threshold of 30,000 points.

Another positive point: durable goods orders increased more than expected in October (+ 1.3%), largely driven by the defense sector.

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