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Data: Investing.com; Chart: Axios Visuals

The ADP private payrolls report showed U.S. employers cut 123,000 non-government jobs in December, the first net job loss since April.

Why it matters: There are still 10 million more unemployed Americans than there were in February and the report suggests a weak job climate could persist, despite recent relief efforts from Congress.

The big picture: Job gains have been slowing since May when the U.S. unexpectedly added 2.5 million jobs, and if Friday's numbers from the Labor Department follow the ADP report's direction the trajectory will have reversed the labor market's recovery in just eight months.

  • Economists had expected employers to add 340,000 private sector jobs last month.

The intrigue: The largest firms in the country (those with more than 1,000 employees) shed 169,000 positions.

Be smart: Big companies are flush with cash right now thanks to the Fed's massive market interventions in March that reopened credit markets and sent the cost of new debt back toward record lows.

  • The fact that large firms are cutting jobs, rather than hiring, points to the arrival of the new employment paradigm I wrote about in September wherein businesses are doing everything they can to ramp up productivity while also reducing costs, largely in the form of jobs and labor expenses.
  • Big corporations are now fighting for a “bigger piece of a smaller pie” thanks to the coronavirus pandemic's negative impact on household budgets, and are unable to raise prices meaningfully but also need to push forward with technology upgrades and investment to compete.

What to watch: The Fed noted in the minutes of its most recent meeting that "participants saw increased challenges for the economy in the coming months," due to surging COVID-19 cases and reduced spending, especially on services requiring in-person contact.

The last word: “America’s great jobs machine ran into a wall of rising coronavirus cases and state lockdowns which puts the entire economic recovery from recession at risk,” Chris Rupkey, chief economist at MUFG, told Reuters.

  • “The heart of every recession is job losses and right now the decline in jobs at year end is hinting that the dark days of the labor market last spring have returned.”

Go deeper

Updated Jan 28, 2021 - Economy & Business

2020 was the economy's worst year since 1946

Source: FRED; Billions of chained 2012 dollars; Chart: Axios Visuals

One of the last major economic report cards of the Trump era lends perspective to the historic damage caused by the pandemic, which continued to weigh on growth in the final quarter of 2020.

By the numbers: The U.S. economy grew at a 4% annualized pace in the fourth quarter, a sharp slowdown in growth compared to the prior quarter. For the full year, the economy shrank by 3.5% — the first annual contraction since the financial crisis and the worst decline since 1946.

Job gains slow sharply as U.S. adds 210k jobs in November

Photo: Joe Raedle/Getty Images

The U.S. economy added 210,000 jobs in November, while the unemployment rate plummeted to 4.2% from 4.6%.

Why it matters: Job gains slowed sharply, but the labor market recovery remains on track.

Elon Musk's mega-billion bounty

Photo: Patrick Pleul/picture alliance via Getty Images

Here's how insanely rich Elon Musk is: He has unloaded $10 billion of his stock in the past month — and could do that 15+ more times given his silos of shares.

You’ve caught up. Now what?

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