The end of the longest government shutdown in American history means the resumption of the long-awaited monthly economic data releases from the Bureau of Labor Statistics (BLS). However, the November BLS jobs report and a number of other noteworthy economic data releases have been delayed for weeks. What we know about the state of the labor market and the broader economy has come primarily from private data sources in the interim.
The latest ADP Employment Report found that the US economy lost 32,000 jobs in November. Three out of the last four months have seen declines in employment (-29,000 in September and -3,000 in August). This year has seen the most months of negative monthly job growth since the ADP began publishing its report in 2010. Small businesses shed 140,000 jobs last month while nearly all sectors except for leisure and healthcare lost jobs.
The National Federation of Retailers’ estimated rates of seasonal hiring were ultimately down by 40% this season compared to last year. While holiday sales were up 4% compared to last year, this year’s rate of real spending growth could end up being flat. Even though Black Friday prices increased by 7%, the volume of overall holiday shopping decreased by 1%.
In other words, not only did consumers pay more for a smaller amount of holiday gifts, but there were fewer store associates to help with their shopping needs. Even before the onset of the winter holiday season, freight demand, a major indicator of where the economy is headed, has been down significantly this season.
On the labor side, many workers face a slowing labor market, while consumers’ willingness or ability to spend has also been limited. This produces what many economists are calling the “k-shaped economy,” a visual metaphor in which the two diagonal lines in the letter ‘K’ denote the two diverging paths of households of differing economic levels. In the case of the larger consumer economy, high income earners buoyed by stock gains and rising earnings have continued to spend while low- to moderate-income (LMI) earners have cut back on their spending.
LMI households are facing a debt crunch as delinquencies on automobile loans and student loans rise alongside tariff-induced consumer price increases. The headwinds facing LMI households have only increased over this year across the labor and financial markets spectrum.
With only the leisure and healthcare industries reliably adding jobs, the labor market is bad for anyone not looking to be a nurse or a bartender. It is why households are reporting concerns about the future trajectory of both the labor market and wider economy. So far this year, the number of newly unemployed individuals has been stable while the pool of those already jobless remains elevated. Thus, no one is getting hired or fired – yet.
Joseph Dean is the Jr. Racial Economic Research Specialist with NCRC’s Research team.
Photo credit: Karola G. from Pexels.
