Employment Growth Expected to Lag GDP
New York, NY, April 19, 2021-U.S. gross domestic product will grow 6.4% this year, measured from Q4 of last year to the same period of this year, say economists surveyed by WSJ. They expect employment this year to grow 5%.
“Economists point to two key reasons for the lag in job growth: Many companies will be reluctant to hire until they are convinced consumer demand will endure. In addition, millions of workers left the labor force during the pandemic and might take time to return.
“Consumer spending at restaurants, hotels and salons is already starting to take off as the grip of the Covid-19 pandemic eases and more people get vaccinated and draw on their stimulus checks and savings.
“But many economists expect economic activity to pick up faster than payrolls, at least initially, for several reasons, causing bottlenecks and wage pressures.
“This happened last year for many manufacturers that experienced labor shortages as Americans working from home ordered more furniture, exercise equipment and other goods than before the pandemic. This year, it is likely to be the case particularly for providers of services requiring proximity to people, since they saw the biggest drops in business and employment during the pandemic and are poised to see the biggest rebound in demand this year.”