The Recovery Stalls, But Not For Housing

by Mischa Fisher, Chief Economist | January 2021

December was a disappointment for job growth across the economy with total payrolls dropping for the first time since the start of payroll employment recovery in May. The 1% job loss means the recovery stalled for much of the economy, just not for the residential construction sector, which now exceeds the level it stood at in February before the onset of the COVID-19 pandemic.

Nationally, the Number of Jobs Shrunk

From May through November, payrolls across the country grew an average of 1.8 million per month, however payrolls in December shrunk by 140,000, going negative for the first time since the onset of the recovery.

Source: Bureau of Labor Statistics

While the negative drop of 140,000 in December pales in comparison to the nearly 21 million jobs lost in April, it is still one of only a handful of times that monthly job growth has been negative in the last 10 years, signaling the substantial toll COVID-19 is still taking on our economy and on people’s lives.

Employment in Residential Construction Remains a Bright Spot for the Recovery

While overall job growth shrunk, residential construction and remodeling employment remains the rare bright spot. Overall jobs shrunk by about 1% in December, while for Residential Specialty Trades Contractors, a field that captures professions like plumbing, painting, and electrical work, employment grew by about 0.65%, around 8% growth per year if annualized. Residential building construction, which includes trades professions but also other professional work related to residential building construction such as general managers, planners, and salespeople, grew even better, about 1.06% month over month, an annualized rate of over 13%.

Source: Bureau of Labor Statistics

These areas are bright spots for the economy for a number of reasons, including demographics, low interest rates, and a shift to the home in consumer spending.

Leisure and Hospitality Service Jobs Are Being Hit Hard

Among the large employment sectors, leisure and hospitality lost 498,000 jobs in December, in contrast to the large construction sector, which overall grew by 51,000 jobs.

Source: Bureau of Labor Statistics

This matters because the construction sector is currently suffering from a trade labor shortage, with opportunities for job growth and high career satisfaction. (Our annual Skilled Trades in America report covers the opportunities and high job satisfaction in the industry)

A Roadmap for Recovery

We can hope that 2021 brings the virus under control, stems the loss of life, and delivers broad based economic recovery. The December jobs report highlights one area of low hanging fruit to help boost that last point of delivering a broad-based recovery: transition more careers from other sectors into the skilled home trades. Our state by state guide to help answer the question of how to enter the skilled trades is here.

NOTE: It’s important we remember the most significant part of any issue is the human toll. Compassion and empathy for those afflicted should always be front of mind, and never be substituted for financial or economic analysis.