The U.S. economy added a record 6.4 million jobs in 2021, rebounding strongly from unprecedented losses in the year prior due to the pandemic.
Furthermore, the unemployment rate fell to 3.9% in December, according to Labor Department data released Friday. That represented a drop of 2.8 percentage points over the course of 2021, the best annual improvement on record. Early last year, economists anticipated the unemployment rate to end 2021 at 5.5%.
After shedding more than 22 million jobs at the start of the pandemic, the widespread availability of vaccines in early 2021 supported a bounce back in demand for services as pandemic-weary consumers ramped up spending on travel and dining out. And excess savings, fueled in part by the Democrats’ $1.9 trillion stimulus bill in March, bolstered demand for goods.
That in turn spurred hiring in pandemic-battered industries like leisure and hospitality as well as quickly growing sectors like transportation and warehousing.
The recovery has undoubtedly had some setbacks, too. Covid-19 fears, child-care challenges, early retirements and elevated savings have held down workforce participation, causing widespread worker shortages. That’s driven job openings to record highs, and left businesses desperate for employees scrambling to increase headcount.
Despite the hiring surge, payrolls remain 3.6 million below pre-pandemic levels.
Both statistics provide strong talking points heading into the midterms later this year for President Joe Biden, whose approval ratings have sunk below 50% in part due to Americans’ disapproval of his handling of the economy.
Following the report, Jesse Lee, a representative for the White House’s National Economic Council, touted the progress the labor market made over the course of the year.
On the forefront of many voters minds is the rapid rise in consumer prices. After over a decade of price stability, a combination of factors — including labor and materials supply constraints, transportation bottlenecks and stimulus-supported consumer demand — have driven gauges of U.S. inflation to levels not seen in nearly 40 years. The closely-watched consumer price index will be released next week.
