Bankof America – U.S. economy adds 49K jobs as unemployment falls to 6.3%

U.S employers added just 49,000 jobs in January, a sign that that the viral pandemic retains a tight grip on the economy nearly a year after it triggered a painful recession.

The tepid increase followed a decline of 227,000 jobs in December, the first loss since April. The unemployment rate for January fell from 6.7% to 6.3%, the Labor Department said Friday. About half the drop occurred because some of those out of work found jobs, while others stopped looking for work and were no longer counted as unemployed.

Friday’s figures reflect a faltering job market, slowed by a viral pandemic that is still causing consumers to avoid traveling, shopping, dining out, attending entertainment venues and engaging in other forms of face-to-face contact. Nearly 10 million jobs remain lost to the pandemic.

Some states and localities re-imposed restrictions on businesses in December as cases spiked. Some of those restrictions were loosened in January, though perhaps not in time to affect the jobs report, which measures employment in the middle of each month.

As hiring has slowed, many employers have continued to lay off workers. The number of applications for unemployment benefits, though declining for the past few weeks, remained at an elevated 779,000 last week.

The hardships that millions of Americans are suffering trends have fueled President Joe Biden’s push for a $1.9 trillion stimulus package, which would provide $1,400 checks for most U.S. individuals and a $400 weekly unemployment payment on top of state benefits. The package would also extend two federal jobless aid programs, from mid-March through September.

The damage to the job market since March has widened financial inequality in the United States, especially hurting women and people of color. At the same time, Americans fortunate enough to have kept their jobs have amassed $2.3 trillion in savings — double the pre-pandemic total. That enlarged pool of savings could fuel a rapid rebound in spending as business restrictions are lifted and more Americans become more confident about shopping, dining out and traveling.

Economists increasingly suggest that as vaccinations reach a critical mass in the coming months and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions. Bank of America estimates that growth could reach 6% this year, which would be the fastest since 1984.

Some hopeful signs have emerged recently to suggest that the economy might be picking up a bit. Auto sales rose solidly in January. And a gauge of business growth in the service sector picked up to its highest level in two years. It also showed that services firms added workers last month. A separate measure of manufacturing indicated that factories are also expanding. So is spending on home construction.