🇺🇸We expect easing #labor supply constraints & historically tight labor market conditions will draw people back into the US workforce in the coming quarters

We see the US labor force participation (LFPR) rate gradually rising from 61.6% to around 62.6% by the end 2022

Short 🧵
While the LFPR recovery is expected to undershoot the pre-pandemic rate (over 63%), the shortfall mostly reflects an aging population.

We find that the drag from baby boomers retiring (or exiting early) has offset the boost from sidelined workers re-entering the labor force.
We estimate that about 30% of the LFPR shortfall, or 0.4ppt, is structural (aging of the US population).

Remaining 70% attributable to early retirement, lost immigration, & some temporary headwinds stemming from lingering Covid fear, childcare responsibilities, & discouragement
Marked improvement in the public health situation, return to in-person schooling, vaccination of children aged 5-11 & expiration of emergency unemployment benefits should create an incentive for hesitant workers to re-enter the workforce.
Rebounding immigration should also help.
Historically, the participation cycle has tended to lag the unemployment cycle, reflecting the time it takes to heal some of the recession scars. But cyclical forces from strong labor demand and hot wage growth will eventually pull disenfranchised workers back into the workforce

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More from @GregDaco

19 Nov
🇺🇸 Economic impact of the infrastructure & #BuildBackBetter plans.

Our November baseline forecast includes both the bipartisan #infrastructure package and a $1.8tn BBB bill consisting of spending on social programs and climate initiatives via @OxfordEconomics Image
The $1.2tn #Infrastructure and Investment Jobs Act (IIJA) provides $550bn in new spending over the next 10 years.

We estimate it’ll boost #GDP growth by 0.1ppt in 2022 and 0.3ppt in 2023, with a cumulative 150,000 new jobs by the end of 2023.
Given that shovel-ready projects are a myth, we anticipate government outlays will only increase gradually, and the impact on #inflation will be minimal
Read 7 tweets
3 Sep
🇺🇸August #Jobsreport: "It's a softie"

🟡Payrolls +235k
🤏Private +243k
🤏Goods +40k
🤏Services +203k
🔴Gov -8k

🟢Revisions⬆️134k

#Unemployment 5.2% (-0.2pt)
🟡Participation rate 61.7% (flat)
✅Wages +0.6%

🔴Job loss vs Feb'20: 5.3mn
⬆️Share regained:76%
The US labor market is exiting the summer with much less momentum then when it entered with only a 235k advance in August

▶️Only 1/3 of 3-month trailing average of 750k
▶️Well short of our under-consensus 675k call
The breadth of job gains in the private sector cooled visibly in August with 62% of industries growing, from 69% in July
Read 14 tweets
5 Mar
🇺🇸#Jobsreport: An early blossom for employment

🟢Total +379k in Feb
💪Private +465k
Goods -48k
Services +513k
👎Gov -86k

🟡Revisions +38k
🛑Job loss relative to Feb'20: 9.5mn
🛑Share of #COVID19 loss regained only 58%

#Unemployment rate: 6.2% (-0.1pt)
LFP 61.4% (flat)
Many elements of positive news:

1. Upward revisions to Dec/Jan: +38k

2. The 3-month averages are perking up

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
Read 14 tweets
22 Dec 20
🇺🇸 #GDP thread

There are only so many ways to spin old data in a rapidly evolving #COVID19 environment.

The economy grew an upwardly revised 7.5% (⬆️0.1ppt) or, 33.4% annualized (⬆️0.3ppt) in Q3 – recouping 2/3 of Covid output loss.

Still, remained 3.4% smaller than end 2019
The strong Q3 #GDP performance gives a false impression of the economy’s true health.

Much of Q3 gain came from carry-over effects from fast progress in May-July while real GDP remained down 2.9% y/y in Q3.
With most of Q4 in the books, we expect ongoing but much slower #GDP growth around 1.5% (or, 5.5% annualized) in the final quarter of the year.

Still, that will also reflect much stronger entering Q4 than the current underlying pace of activity
Read 9 tweets
16 Dec 20
#Fed #FOMC statement largely unchanged

- 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.
Read 5 tweets
4 Dec 20
🇺🇸 #Jobsreport +245k in Nov 👎

- Private +344k
- Goods +55k
- Services +289k
- Gov -99k w/ -93k #Census

- Job loss since Feb: 9.8mn☹️
- Share of #COVID19 loss regained: 56%

- #Unemployment rate: 6.7% (-0.2pt)
- LFP 61.5% (-0.2pt)👎
- Share LT unemployed (>27wks): 37%🚨
The "ok" news was that private payrolls +344k

- #transportation +145k led by +82k couriers!
- professional & biz services +60k
- #healthcare +60k
- #manufacturing +27k
- #construction +27k
The bad news:

- #Retail -35k with losses at brick & mortar stores
- Education -6k
- Restaurants -17k
> this could worsen in the winter given rising #COVID19

- Government employment -99k
- Census -93k
- State employment flat
- Local employment -13k
> Education jobs ⬇️
Read 11 tweets

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