March’s jobs report was a blockbuster and early reactions were almost unequivocally and universally upbeat.
“Everything comes up roses,” one headline declared.
“With more and more movement there is more and more demand, resulting in the need for more and more workers,” ING’s James Knightley said, adding that “given continuing upward moves in the daily restaurant and flight data through the second half of March, we should be looking at a jobs growth figure well in excess of 1 million in April.”
Services sector hiring was fairly robust. I say “fairly” because the March report actually showed a smaller gain for leisure and hospitality compared to February (figure below). I don’t want to make too much of that, but it’s at least worth a mention.
Note that the sector has just now recovered from the huge loss in December, when the winter COVID wave dealt a fresh blow to already beleaguered industries.
What about food service? That’s important. As regular readers are aware, I have a soft spot for bars despite being medically forbidden from consuming my beloved Balvenie ever again.
But even if I didn’t care personally for the economic fate of America’s bartenders and servers, note that restaurants and bars are a critical part of the economy no matter where you go. They’re crucial to the downtown ecosystems devastated by last year’s flight to the suburbs and they’re also critical in smaller cities and even in the tiniest of locales.
Food services and drinking places added 176,000 jobs in March, on top of an upwardly revised 309,000 in February. The total for 2021 is now more than a half-million (figure above).
Checking the usual “structural damage” indicators, the March report showed the percentage of total unemployed jobless for 27 weeks or longer rose again. It hit 43.4% in March’s report, up from 41.5% the previous month (figure below).
The number of job losses counted as “permanent” fell marginally, but the total is still more than two million higher than it was 13 months ago.
Specifically, there are more than 3.4 million Americans in the “permanent” category. That series remains extraordinarily elevated (figure below).
Finally, you might recall that last month, the gap between African American unemployment and white unemployment rose pretty sharply. That was a testament to the urgency of the Fed’s efforts to help foster a more inclusive labor market.
Fast forward to March and the gap narrowed, albeit only slightly (figure below).
One could, of course, parse March’s report further. There are a theoretically endless number of charts and conclusions to draw.
Ultimately, though, the “all roses” characterization is probably a semblance of accurate, although the Biden administration will invariably say there’s much more work to be done.
And, as you can see from many of the visuals above, they’ll be correct in that assertion.
Biden is correct. As H has repeatedly stated, as one of the wealthiest countries in the world, we should make sure our citizens have a basic level of housing, food, healthcare and education. The government is either going to give UBI or make sure a job is available. I am definitely in the “make sure a job is available” camp. People sitting around without a job end up spending too much time on TV/electronic devices and are prone to addictions of many varieties.
The infrastructure bill is definitely needed because “permanently remote” is here to stay reducing the demand for some food/drink establishments, especially in CBD’s.
Besides, our roads are generally in terrible shape and if you own a nice car, especially of the sports car variety, the conditions of the roads are so bad that you might not even want to drive it downtown- even if your favorite restaurant has reopened.
The job guarantee is certainly easier to sell politically than UBI — and gut instinct says your points are all valid.
I felt obligated to read Stephanie Kelton’s oeuvre; although it didn’t contain anything new to me, it was a soothing bubble bath of validation for my predilections. I found it notable that she focused strongly on the GJG in her policy prescriptions and, although she mentioned UBI, didn’t dwell on it.
If Kelton be the face of US academic MMT thinking, then it’s skewed toward jobs…
The distinction between UBI and “make jobs available” will become trickier. Our economy doesn’t really need the labor of all of our population. With increasing automation, the trend toward decreased need for labor will increase. The trick will be to make work for people that is meaningful–and of course instituting policies so that the wealth/income produced in our economy is not concentrated too highly in the hands of the wealthiest. One can envision positions such as being a stay-at-home mother, being a home health aid, caring for an old relative, or making rounds visiting lonely old people who live alone could become good-paying jobs in such a system.
The number of permanent job losses is half what it was at this stage of the GFC.
Companies are overall in better shape now than then. Banks are full of cash to lend. Investors are overflowing with cash to invest.
Consumers have lower debt and more liquidity than then, by a country mile. Heck, consumer balance sheets may be better than they were at the height of the last expansion.
Monetary policy and fiscal policy are far, far more stimulative now. If Obama & Bernanke had a bazooka squad, Biden & Powell wield the 18 inch guns of the mighty Mississippi.
How is this not a setup for a rapid, strong, even ferocious, jobs and economic recovery?
Okay, there’s scenarios where that doesn’t happen. Virus comes roaring back, Congress gridlocks, or maybe Fintwit is right and everything above is merely the vaporous tail to the option vol-of-vol gamma-dog.
But if investing is about betting on probability-weighted scenarios, it is hard for me to think at least 60% of the 6-12 month outcomes aren’t some form of “strong recovery”.
These jobs in the service sector are welcome but how much will they really affect the overall economy? They are mostly low paying subsistent level jobs. An infrastructure push would create higher paying jobs and have the additional benefit of bringing the USA into the 21st century. But, the USA has a poor record of efficient allocation of money towards major infrastructure projects. They take forever to be approved and end up costing much more than like projects in other advanced countries.