US job market to remain weak until late 2022, Fitch says

By Ovunc Kutlu

ANKARA (AA) – US job market is expected to remain weak until late 2022 due to the coronavirus pandemic, according to Fitch Ratings.

"A return to full employment in the US is still 18 months away and will require the creation of a further seven million jobs," the global rating agency said in a statement on Wednesday.

Almost 22 million jobs were lost in the March-April period of 2020 in the US because of the pandemic. Since then roughly half of that amount has recovered.

The world's largest economy has around 9.8 million unemployed individuals as of April 2021, when unemployment rate rose to 6.1% from 6% a month earlier, according to the US Labor Department.

"Massive job market disruption in 2020 is likely to lead to some medium-term 'scarring2 and reduced labor supply as long-term unemployment rises and some older workers are permanently discouraged from labor force activity," Fitch said, adding it will take a while for the labor market to regain balance.

Stimulus packages by former President Donald Trump and incumbent Joe Biden administrations have provided strong support for the labor demand.

Fitch, however, said it does not expect to see a return to full or maximum employment in the labor market until the last quarter of 2022.

Due to weak labor market conditions, the US Federal Reserve is not likely to increase interest rates until at least 2023, and the central bank is currently signaling 2024 for a rate hike, it added.