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Illustration: Eniola Odetunde/Axios

The fourth quarter is a major inflection point. The U.S. economy is moving out of its bounce-back recovery from the coronavirus depression and could be returning to slower growth and recovery or it could be moving toward a recession.

The state of play: We are about to see a second wave of job losses — this one more likely to permanently push millions out of the labor force, lower wages and leave long-lasting scars on the economy.

On one side: The coming October jobs report is expected to show employers added 625,000 jobs last month — demonstrating a labor market continuing to slow but still moving in a positive direction.

On the other side: Layoff announcements picked up at the end of October, with ExxonMobil, Chevron, Charles Schwab and Raytheon all announcing the elimination of thousands of white-collar jobs.

  • Those followed major layoffs from Wells Fargo, Goldman Sachs, Salesforce, Allstate and WarnerMedia.

The intrigue: Rather than a panic-driven effort to cut costs and stay above water, these job losses are largely a result of companies reducing headcount after mergers and acquisitions or as part of a longer-term strategy.

  • Businesses have been positioning themselves for an increasingly competitive landscape by boosting productivity and reducing costs, so they've been cutting jobs and investing in new technology, as I wrote in September.
  • "Almost every client that we deal with, irrespective of sector, is trying to drive cost down and make their products and services more affordable," Tim Ryan, U.S. chair and senior partner at PwC, said during a September call with reporters.

By the numbers: In the first half of 2020, more than 3,600 companies filed for bankruptcy, according to legal services provider Epiq, and the pace has picked up since.

  • In June, just over 600 companies filed for bankruptcy protection, up 43% from June 2019.
  • In September, 747 companies filed, a 78% increase over September 2019.
  • “These commercial filings are primarily small businesses that do not have access to capital or stimulus," Deirdre O’Connor, managing director of corporate restructuring at Epiq said last month. "Unfortunately, those bankruptcies will continue to rise in the current economic environment."

Go deeper

Dion Rabouin, author of Markets
Jan 8, 2021 - Economy & Business

Labor market is moving in the wrong direction

Data: U.S. Department of Labor via FRED; Chart: Axios Visuals

More than 1 million Americans filed for unemployment benefits for the first time last week, even as new applications for the Pandemic Unemployment Assistance program fell to their lowest level since March.

State of play: The $900 billion stimulus bill passed by Congress at the end of December extended the PUA program through at least March but also added a new verification process that forces applicants to reapply in order to reduce fraud.

27 mins ago - Health

Biden says it's "not the time to relax" after touring vaccination site

President Biden speaking after visiting a FEMA Covid-19 vaccination facility in Houston on Feb. 26. Photo: Mandel Ngan/AFP via Getty Images

President Biden said Friday that "it's not the time to relax" coronavirus mitigation efforts and warned that the number of cases and hospitalizations could rise again as new variants of the virus emerge.

Why it matters: Biden, who made the remarks after touring a vaccination site in Houston, echoed CDC director Rochelle Walensky, who said earlier on Friday that while the U.S. has seen a recent drop in cases and hospitalizations, "these declines follow the highest peak we have experienced in the pandemic."

Updated 48 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Most COVID-19 survivors can weather risk of reinfection, study says — "Twindemic" averted as flu reports plummet amid coronavirus crisis
  2. Vaccine: FDA advisory panel endorses J&J COVID vaccine for emergency use — About 20% of U.S. adults have received first vaccine dose, White House says — New data reignites the debate over coronavirus vaccine strategy.
  3. Economy: What's really going on with the labor market.
  4. Local: All adult Minnesotans will likely be eligible for COVID-19 vaccine by summer — Another wealthy Florida community receives special access to COVID-19 vaccine.
  5. Sports: Poll weighs impact of athlete vaccination.