U.S. private employers scaled back their hiring in November, adding the fewest workers in six months as soaring new COVID-19 infections led to a wave of business restrictions, although other signs point to what White House economic adviser Larry Kudlow said is a “pretty strong economy.”
In its closely watched jobs report, the Labor Department said Dec. 4 that nonfarm payrolls rose by 245,000 last month, after adding 610,000 jobs in October. Economists polled by Reuters had forecast that payrolls would increase by 469,000 jobs in November.
At the same time, the unemployment rate fell to 6.7 percent, from 6.9 percent in October, the Labor Department said.
Despite the below-expectations jobs report, White House economic adviser Larry Kudlow said the economy remains on a strong footing, although it remains roughly 10 million jobs below its pre-pandemic level.
“There’s a lot of suffering out there,” Kudlow told reporters outside the White House, “but I will also argue the economy has registered a very strong comeback from the peak of the pandemic contraction, including with today’s jobs numbers, with the 6.7 percent unemployment rate.”
“There’s still over 10 million people who are jobless, and that’s not good. It is hardship. And by the way, that should be a target with any assistance package. However, at the peak, it was 23 million,” he said, referring to the surge in job losses at the height of the pandemic-driven lockdowns in April.
“There’s a housing boom going on, consumer spending is strong, there’s a lot of business and factory production going on,” he said, noting recent encouraging manufacturing numbers released by the Institute of Supply Management (ISM) and the Purchasing Managers’ Index (PMI).
“The ISMs and the PMIs were nearly 60 percent—that’s a very healthy number,” Kudlow said. Numbers above 50 percent in both measures reflect an expansion in activity, while figures below that figure represent a contraction.
“I think we have much more work to do, I understand that, but I think we’ve come a long way, and I think that’s a pretty strong economy.”
The economy grew at a historic 33.1 percent annualized rate in the third quarter after shrinking at a 31.4 percent rate in the April–June period, the deepest since the government started keeping records in 1947. Growth estimates for the fourth quarter are, for the most part, below 5 percent.
The CCP (Chinese Communist Party) virus remains a threat to the economy, however, with many experts arguing that the dynamics of the recovery depend on how fast an effective vaccine can be made available. In response to a surge in infections and hospitalizations, at least 12 states have imposed new restrictions on businesses in the past month.
“Help is on the way,” Kudlow said. “Vaccines are a week or two away. We’ll get 20 million-plus by the end of this month, 40 million by January, and up to 100 million by late March, April,” Kudlow added, noting that billions of dollars have been poured into the development and distribution of COVID-19 vaccines and therapeutics under the Trump administration’s Operation Warp Speed program.
Two enhanced federal unemployment benefits programs are set to expire at the end of the month, with pressure mounting on Congress to enact another rescue aid package.
A bipartisan group of senators has proposed a $900 billion plan that would include expanded unemployment benefits, more small business loans, and aid to state and local governments, although there are no signs of an imminent deal.
Kudlow said Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) are in talks on a relief package, which he said have “a somewhat more optimistic tone,” although policy differences remain.
He said Senate Republicans are calling for a top-up of Payroll Protection Program (PPP) funds for small businesses, a federal boost in unemployment assistance, and liability protections for businesses and other organizations. Kudlow also said there remains about $600 billion in unspent funds from a prior round of aid, which he said could be redeployed or reappropriated.
For months, McConnell has pushed a $500 billion approach that Democrats have rejected as inadequate. Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) previously sought a $2.2 trillion bill that McConnell dismissed. The White House went up to about $1.9 trillion during the height of the negotiation process.