US (Washington Insider Magazine) – There is no question the U.S. economy is flourishing with new record lows for unemployment and growing demand for imports amidst the ongoing COVID-19 pandemic, but the latest spike could reverse the strong resilience.
In fact, the United States Labor Department reported the unemployment rate had fallen to 3.9% in December, despite creating less than the expected amount of new jobs. This news immediately followed the Department of Commerce’s announcement that the U.S. imports in November had increased by 4.6% in the past month to $304.4 billion.
Rising import levels are the main contributor to the $80.2 billion trade deficit of December, close to the record high of $81.4 billion set in September. A substantial trade deficit is seen as a negative to many observers, Donald Trump a chief among them during his presidency, going to extremes to close the import/export gap. Economists will agree that this actually points to a U.S. economy that is leading the global ascension from the pandemic-induced economic slump.
There’s a common misconception that a heavy import economy is a bad sign for the economic health of the U.S. However, it’s usually an indication that the U.S. is on an incline relative to other countries.
According to Gary Hufbauer, a senior associate with Peterson Institute for International Economics, the dollar is significantly stronger than we have seen in previous years. This is a good thing, but it can also further exacerbate the trade deficit. Overall, as we are no longer backed by the gold standard, the strength found in our dollar today puts forth a cautiously optimistic view for the economic future of the U.S. Many stakeholders benefit from the strength of our economy, especially parties overseas. The effects are felt worldwide in consumer markets as well, as the consumers there are clamoring to purchase international goods.
Employment continues rising in America. The Department of Labor released its monthly jobs report on Friday, and it reinforced the fact that the economy has shown a strong resilience from the recession caused by the COVID-19 pandemic. The 199,000 number was not as high as predicted, but it did contribute to an overall growth of 537,000 jobs per month for all of 2021, falling from 6.4% unemployment in January 2021 to 3.9% in December. The decline in unemployment didn’t necessarily attribute to job growth due to millions of Americans dropping out of the labor force. Additionally, Black Americans still face a challenge finding employment in the economy, seeing an increase from November to December from 6.1% to 6.5% respectively.
Omicron looms as a possible wild card on recent upturns in the economy. The most recent economic data can’t yet interpret the degree to which the surging COVID variant has had on U.S employment because the reference week used by The Labor Department was before the spike was at its peak. The January 2022 data will be presented on February 4 and should show the impact the recent increase in infections has had. All in all, the Omicron has the potential to not only affect the job market but also reverse the recent success of the past year.
