Gloomy Labor Market Outlook
President-elect Joe Biden called the report “grim” and urged Congress and Trump to provide additional fiscal stimulus. “Americans need help and they need it now,” Biden said in a statement.
“The recovery is stalling and fragile at best,” said Sung Won Sohn, finance and economics professor at Loyola Marymount University in Los Angeles. “The onset of winter and resurgence of the virus could knock the economy into another dip before the vaccine and more stimulus from Washington come to the rescue.”
“At this rate, complete stagnation or job losses in December would not be a huge surprise,” said Beth Akers, senior fellow at the Manhattan Institute. “It’s hard to imagine that the remaining jobs we lost early this spring will return until we’ve successfully distributed a vaccine that would allow businesses to return to normal operations.”
A Few Silver-Linings
JJ Kinahan, chief market strategist at TD Ameritrade, noted the report “was not as bad as it seems” in part because a chunk of the lost jobs came from the U.S. government as the 2020 Census count wrapped up.
Kinahan also noted “it’s really hard to estimate what these numbers are going to be when states are going from being completely shut down to being completely open. I think you’re seeing that in the market’s reaction.”
Brad McMillian, CIO for Commonwealth Financial Network, also pointed out that average hours worked “remained strong” last month, “suggesting that overall labor demand remains healthy, and the drop in the unemployment rates suggests the labor market continues to tighten.”
Jobs Report Could Pressure Lawmakers to Move Forward Faster with Additional Stimulus
Some traders saw the weaker-than-expected headline number as a positive because it could pressure lawmakers to move forward swifter with additional fiscal stimulus.
“Friday’s jobs report data “is beckoning lawmakers to act on additional fiscal stimulus measures in order to bridge the output gap in the economy until a vaccine is deployed and the longer they hold out the wider the gap may become,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.
Senate Minority Leader Chuck Schumer tweeted the report “report shows the need for strong, urgent emergency relief is more important than ever.”
President-elect Joe Biden also called for more stimulus, noting Friday’s report foreshadows a “dark winter.” Biden later said it “would be better if they had the $1,200’ stimulus checks, and he understands “that may still be in play.”
For a look at all of today’s economic events, check out our economic calendar.