The $900 billion financial aid package that Congress enacted last month should also help accelerate the recovery, economists say. It will provide a $300-a-week federal jobless benefit on top of an average state benefit of about $320. In addition, millions of Americans stand to receive $600 payments, some as early as this week.
This week, Goldman Sachs upgraded its forecast for economic growth this year to a robust 6.4% from its previous estimate of 5.9%. Its upgrade was based in part on the expectation that the Biden administration, with help from the now-Democratic Senate, will support another rescue aid package.
For now, the evidence suggests that hiring and economic growth are faltering under the weight of the pandemic. On Wednesday, the payroll processor ADP reported that private employers shed 123,000 jobs in December, the first such monthly decline since April. ADP’s figures generally track the government’s jobs data over time, although they can diverge significantly from month to month.
Last month, Coca-Cola Co. said it would cut 2,200 jobs from its global workforce, with about half those layoffs occurring in the United States. 3M, a major manufacturer, has said it will lay off 2,900 workers worldwide.
In November, U.S. consumer spending declined for the first time in seven months, having steadily weakened since summer. Retailers have been especially hurt. Purchases at retail stores have dropped for two straight months.
During the holiday shopping season, consumers pulled back on spending, according to debit and credit card data tracked by JPMorgan Chase based on 30 million consumer accounts. Such spending was 6% lower in December compared with a year ago. That was worse than in October, when card spending was down just 2% from the previous year.
Restaurant traffic has also dropped, according to the reservations website OpenTable. Seated dining is down 60% this week compared with a year ago, much worse than two months earlier, when they were down about 35%.