January 20, 2021

The December Numbers Were Awful, but the Economy Has a Clear Path to Health

The list of sectors fitting that basic pattern — still at levels consistent with a recession but clawing their way back steadily — is long, and it includes industries as varied as truck transportation, real estate rental and leasing, and professional and business services.

Both the policy and market environment should create tailwinds for those sectors in 2021, helping them return to full health faster.

A booming stock market doesn’t translate into more economic activity overnight. But as corporate executives make their capital spending plans and as consumers make their spending decisions, surging stocks do tend to have a positive effect. That would imply that the positive effects of new market highs over recent weeks should start to show up as public health concerns recede.

The December employment numbers cover a period before Congress reached a compromise pandemic aid package worth $900 billion. Among other things, the bill includes enhanced unemployment benefits that will help the hundreds of thousands of workers whose jobs disappeared in December, as well as $600 checks that should strengthen consumer spending in the months ahead.

Moreover, the Democratic victories in Georgia this week and the resulting Senate majority make it more likely that those checks will grow to $2,000 per person. It also means that the Biden administration will have the flexibility to undertake a more ambitious agenda, including infrastructure spending, that should support overall economic activity.

A Democratic Congress will also be likely to provide more aid to states, helping one of the other areas of job loss in December besides leisure and hospitality (state and local governments cut 51,000 jobs last month).

Article source: https://www.nytimes.com/2021/01/08/upshot/jobs-report-economy-analysis.html

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