2) Employment: Through November 2020, the economy lost 9.37 million jobs. By April 2020, the economy had lost 21.7 million jobs, and then added back 12.33 million jobs by November. But job growth slowed over the last few months. Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?
For review, here is a table of the monthly change in total nonfarm jobs, and ex-Decennial Census. Monthly job growth has been slowing, and was on 338 thousand, ex-Census in November.
| Jobs Added per Month (000s), 2020 | ||
|---|---|---|
|   | Total | ex-Census |
| Jan-20 | 214 | 209 |
| Feb-20 | 251 | 244 |
| Mar-20 | -1,373 | -1,390 |
| Apr-20 | -20,787 | -20,792 |
| May-20 | 2,725 | 2,740 |
| Jun-20 | 4,781 | 4,785 |
| Jul-20 | 1,761 | 1,734 |
| Aug-20 | 1,493 | 1,255 |
| Sep-20 | 711 | 752 |
| Oct-20 | 610 | 758 |
| Nov-20 | 245 | 338 |
| Dec-20 | — | — |
Some early December forecasts suggest even further slowing, from Merrill Lynch economists:
“We forecast nonfarm payrolls growth of 50k in December after increasing by just 245k in November. We think government payrolls will likely decline by 25k in December as the few remaining temporary census workers roll off payrolls and additional education workers at the state and local level are furloughed due to stricter COVID-19 restrictions. This implies private payrolls should grow by only 75k in December, decelerating from a gain of 344k in November.”
This will likely be a very difficult winter with the pandemic, and it seems likely job growth will be stunted for the next several months. If the pandemic subsides by mid-year, the monthly job gains should increase significantly.
With 3.7 million permanent job losers – about 2.5 million more than at the beginning of 2020 – it seems unlikely the economy will add back the remaining 9 million jobs lost within a year, and also add jobs for new entrants in 2021. I think something like 6 to 8 million jobs could be added in 2021, but it will depend on ending the pandemic and appropriate fiscal policy.
Here are the Ten Economic Questions for 2021 and a few predictions:
• Question #2 for 2021: Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?
• Question #3 for 2021: What will the unemployment rate be in December 2021?
• Question #4 for 2021: Will the overall participation rate increase to pre-pandemic levels (63.4% in February 2020) , or will it will only partially recover in 2021?
• Question #5 for 2021: Will the core inflation rate increase in 2021? Will too much inflation be a concern in 2021?
• Question #6 for 2021: Will the Fed raise rates in 2021? What about the asset purchase program?
• Question #7 for 2021: How much will RI increase in 2021? How about housing starts and new home sales in 2021?
• Question #8 for 2021: What will happen with house prices in 2021?
• Question #9 for 2021: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?
• Question #10 for 2021: How much damage did the pandemic do to certain sectors?