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06-2022

US economy entering 2022 shows strength, but pandemic clouds future

US economy entering 2022 shows strength, but pandemic clouds future

Most measures in early 2022 suggest the US economy is booming, with an unemployment rate reaching record levels and rising demand for imported goods from the rest of the world.

On Friday, the Labor Department announced that the unemployment rate had fallen to 3.9% in December, even as the economy produced less-than-expected growth of 199,000 new jobs. The report comes a day after the Commerce Department announced that US imports in November rose 4.6% from the previous month to $304.4 billion.

Rising levels of imports contributed to a trade deficit of $80.2 billion for the month, which is close to a record high of $81.4 billion in September. While a large trade deficit is seen as a negative by many, especially former President Donald Trump, who went to great lengths to bridge the gap between imports and exports, economists say it could One points to the US economy leading the global recovery from the pandemic. -induced recession.

“When we do better than everyone else, we end up with a big trade deficit,” said economist Gary Huffbauer, a senior fellow at the Peterson Institute for International Economics.

US as an economic engine

It’s a popular misconception that a trade deficit is a sign of bad economic times in the United States, Huffbauer told VOA. “Not at all. It’s an indicator of great times in the US relative to other countries. And that’s where we are. We’re doing pretty well relative to other countries, so the dollar strengthens, which widens the trade deficit, because demand is high.” .

The benefits of a strong US economy are felt around the world, as other countries find American consumers eager to buy their goods.

FILE - People pass near the New York Stock Exchange on March 23, 2021 in the Financial District of New York.

FILE – People pass near the New York Stock Exchange on March 23, 2021 in the Financial District of New York.

China, as always, was the biggest net beneficiary of the US trade deficit, selling $28.4 billion more to US consumers than it bought. The US runs a significant trade deficit of $19.4 billion with other trading partners, including the European Union; Mexico, $11 billion; Germany, at $6.1 billion; and Canada, $5.4 billion.

The US runs a trade surplus with only a few partners. All of Central and South America have the largest surplus with $4.5 billion. The only other surplus of $1 billion or more is with Hong Kong at $1.6 billion and Brazil at $1.0 billion.

job growth continues

The Labor Department’s monthly jobs report, released on Friday, tells the story of one such economy that continues to demonstrate a strong recovery from the pandemic’s slowdown. The 199,000 figure for the month of December was lower than expected but contributed to an average of about 537,000 jobs per month throughout 2021.

All told, the unemployment rate fell from 6.4% at the start of the year to 3.9% in December.

Not all decline in unemployment can be attributed to job growth. As a result of the massive pandemic, millions of American workers dropped out of the labor force. This means that even though the unemployment rate is low, the US still has about 3.6 million fewer workers than in the months before the start of the pandemic.

FILE - Trucks line up to enter the Port of Oakland Shipping Terminal on November 10, 2021 in Oakland, Calif.

FILE – Trucks line up to enter the Port of Oakland Shipping Terminal on November 10, 2021 in Oakland, Calif.

Alice Gould, senior economist at the Economic Policy Institute, said, “We still have avenues in terms of absorbing the labor force, and people who have left the labor force, as well as population growth, but it’s certainly a positive.” signal.” , a Washington think tank.

On a more serious note, the report showed that when it comes to employment, economic recovery is not evenly distributed. From November to December, the unemployment rate among black Americans rose from 6.1% to 6.5%. The problem is particularly acute among black women, who face an unemployment rate of 5.6 percent, which is twice the rate of white women.

Omicron is the wild card

The most recent economic data can’t yet tell us how much of an impact the rising omicron version of the coronavirus has had on US employment. The Labor Department uses a “reference week” each month when calculating job numbers, and the reference week in December was unusually early, covering December 5–11, before the Omicron growth began in earnest.

“Most of it happened in the second half of the month,” Gold told VOA. “So, it’s not really reflecting here at all. On February 4th, when the January figures come out, I’m sure we’ll see a huge impact – hopefully it will be short-lived – but maybe a one on the labor market. significant impact.”

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This article is republished from – Voa News – Read the – original article.

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