Total +80k
Private +94k
Goods +7k
Services +87k
Gov -14k
3. Private payroll diffusion bounced to 57%
It's not just about being above the zero line, it's about ensuring a broad and inclusive labor market recovery
Very encouraging to see some sectors doing better than pre-#Covid (grocery, online, couriers).
Now the key challenge is to get the "face-to-face" sectors back to pre-Covid levels.
How? Via a strong and sustainable health recovery
Because despite the hype about today's strong #jobsreport and despite the 12.9 million jobs recovery since April 2020, 🇺🇸employment remains 9.5mn lower than pre-pandemic.
Why? The number of employed individuals rose and the number of unemployed individuals fell while labor force participation held steady
🚨 Still, the most concerning element is that U-3 #unemployment fails to capture the extent of the labor market damage
Adjusting for misclassification & for the millions that have exited the labor force (by choice or obligation), the true unemployment rate is closer to 9.3%
The U-6 under-employment rate -- factoring those marginally attached and those working part-time but wanting full time employment -- held steady at 11.1%.
However, it's also under-estimated and remains very high in level terms.
The adjusted U-5 and U-6 measures of #unemployment provide a more accurate picture of the long road ahead to a full labor market recovery
Important on the split of temporary/permanent #unemployment:
Share of permanent unemployed rose from 42% to 44%
Share of temporary unemployed fell from 27% to 22%
With 4.3 million permanently unemployed individuals, the rise in permanent #unemployment was faster than during the 2 prior recessions. Encouragingly though, the trend has stabilized. Now we need to get on a downward trend!
- NEW qualitative outcome-based forward guidance for QE program that links the horizon to max employment + price stability goals
- no change to composition or size of QE, but a floor of "at least" $120bn per month
The latest economic projections:
- Stronger near-term growth expectations
- Quite strong #GDP expectations for 2021
- Lower unemployment projections: below 4% in 2023
- #Inflation only a tad firmer: below 2% till 2023
- #Fed funds rate at zero through 2023
The #Fed's #GDP growth & #unemployment forecasts help explain why the Fed decided not to increase size or composition of QE.
They foresee rather strong growth in 2021 with a rapid decline in the unemployment. I wonder what their labor force participation rate assumptions are.
#Fed Beige Book:
👍Modest to moderate activity
👎Some regions slowing
👎Recovery incomplete
👎 Employment growth slowing (at best)
👎Labor supply issues
👍Outlooks remained positive
👎Optimism has waned
👎 Concerns: #Covid fear, lockdowns, fiscal policy cliffs
👍Modest inflation
Initial signs of financial sector stress and expectations of rising delinquencies:
"...deterioration of loan portfolios, particularly for commercial lending into the retail and leisure and hospitality sectors. An increase in delinquencies in 2021 is more widely anticipated..."
"...more school & plant closings, & renewed fears of
infection, which have further aggravated labor supply problems, including absenteeism & attrition
Providing for childcare & virtual schooling was widely cited as a significant & growing issue for the workforce, esp. for women"
The economy grew 7.4% (or, 33.1% annualized) in Q3 – recouping two thirds of the #Covid output loss – but it remains 3.5% smaller than at the end of 2019.
The strong #GDP performance gives a false impression of the economy’s true health.
Much of the Q3 gain came from carry-over effects from fast progress in May-July while real GDP remained down 2.9% y/y in Q3.
Comparing the Global Coronavirus Recession with the Global Financial Crisis is quite telling:
Despite the strong Q3 rebound, real 🇺🇸GDP is now where it was at the trough of the Great Recession.
(*I know Q4 2007 is the start of GFC, but doesn't change the levels much)
Mixed feeling from May #jobsreport: optimism, skepticism & anguish:
- Optimism as payrolls +2.5mn – largest increase on record.
- Skepticism as gain contrasts sharply w/ new unemployment benefit since April.
- Anguish as the cumulative 19.6mn job losses from GCR is 2* GFC
Encouraging 2.5mn job gains concentrated in:
- leisure and hospitality (+1.2mn)
> with food services & drinking place (+1.4mn) making up 1/2 total gains
- construction (+464k)
- health services (+312k)
- #retail trade (+368k)
- #manufacturing (+225k)
But, strains on government budgets & lock down effects were apparent with 585,000 government job losses mostly in local education employment (-310k)