There are positive signs that the US economy might be finally struggling off the enormous difficulties posed by the Covid-19 pandemic. Friday saw Wall Street bouncing back to enjoy record highs after reports that 49,000 jobs had been added across the nation in January.
Prevailing figures suggest that this might be more than just a temporary blip. The NASDAQ climbed 47 points to 13,824, while the S&P500 rose 17 points to 3,889. With investors gaining further good news that President Biden’s plan for extra Covid relief had been passed, it signals that 2021 could be a good year for economic recovery.
Is the US labor market stabilizing?
The addition of 49,000 jobs to the US economy has meant that the nation’s unemployment rate has fallen back down to 6.3%. While this is a commendable achievement, it’s worth noting that there are still more than 10 million Americans out of work compared with February 2020.
The dark days of last April saw the US unemployment rates skyrocketing up to a staggering 14.7%. But with coronavirus restrictions starting to ease and financial help from the government taking effect, it marked a notable return to economic growth.
It’s a remarkable bounce-back since a devastating December that saw more than 140,000 jobs lost across the nation. This was a result of a growing number of Covid-19 infections that sparked more shutdowns and a further slowdown in economic output.
The month was particularly bleak as the previous seven months had shown successive growth in employment figures. But with hard-hit industries like the food services and drinking establishments taking the brunt of the shutdowns, it made for a depressing festive period. However, January’s relatively positive figures have suggested that this December could have been a one-off.
Obviously there are still big problems that remain with well over 17 million Americans filing for unemployment benefits. The Biden administration successfully passed through a $1.9 trillion aid package that will send $1,400 cheques to struggling American families. In addition to this, there would be a rise in the minimum wage and extra relief funds set aside for small businesses. The success of this package will ultimately depend on whether the nation can keep the virus under control.
Biden’s economic plan was passed in the Senate on Friday, but it still faces many hurdles before it gets its full roll-out in just over one month from now. Much will depend on how successfully ongoing vaccination programs get adopted across the nation. Many experts are predicting that it could be well over one year before things start to look like anything approaching normal.
But the fact that the employment statistics are showing signs of reversing the negative trend has meant that Wall Street investors are starting to see a light at the end of the tunnel. The fact that indices have made their biggest weekly advances in over two months is a testament to the sudden wave of optimism.