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America’s Engine Revs Higher
The U.S. Economy is about to Go 100 MPH
According to today’s BLS employment report, America added 379k jobs in February despite dislocations by wintry weather in the South. That’s our young nation’s best performance since October 2020. There was also a +117k upward revision to January’s estimate. Unemployment is down to 6.2%, and at February’s pace of job creation, we’ll be fully recovered by April 2023. Huzzah!
We stand a good chance of getting there before then. After passing a large stimulus package in December 2020, federal policymakers are set to fuel up the economy even more with an even larger package. Combined with more pervasive vaccinations, restaurant re-openings, and Texans whipping off their masks and waving them in the air like they just don’t care, the U.S. economy is about to achieve Formula 1 speeds during the months ahead.
Faster economic growth would be most welcome. The number of people who’ve been unemployed for 27 weeks or longer continues to increase and now exceeds 4.1 million, an increase approaching 3.7x since the pandemic began. Labor force growth remains sluggish amidst the emerging euphoria.
Could we come around the bend with too much speed during the months ahead, risking havoc in the process? If Speed Racer or his long-lost brother Racer X were driving, I wouldn’t worry about it. But neither drives America’s Federal government or central bank. Already, interest rates are heading higher, along with commodity prices, in anticipation of faster growth. Inflation expectations are at multi-year highs, and the Federal Reserve has indicated that they are not going to start braking for many, many months to come. We all want faster growth, but we may get more than we bargained for.
You can read more of my racy insights regarding the construction industry’s employment situation at Associated Builders and Contractors.
Three Key Takeaways
Leisure and hospitality, a segment that encompasses the nation’s restaurant and hotel workers, was driven into an embankment by the COVID-19 recession. The sector added 355k jobs in February, about 286k of which were at restaurants. America still has 2 million fewer restaurant jobs than it did a year ago. This segment is about to take off, and you can expect many new restaurants opening during the months ahead.
I (and everyone else) have been indicating that the leisure and hospitality segment, and specifically restaurants, have fared the worst over the past year. That’s no longer the case. As of February, employment in the clothing and clothing accessories stores subsegment is down 23.2% year-over-year, and those stores lost another 20k jobs in February. This segment is now in last place. Do your part to end the crisis. The time of the boxer shorts is over, the time of the dress pant and pantsuit has returned. No pants, no shoes, no more substacks.
One in five employed Americans (33.9 million) teleworked because of the pandemic in February. That figure, which remains astonishing, is down from 48.7m in May 2020 and 34.4m in January 2021. The economy really is reopening.
What to Watch
The $1.9 trillion relief package—officially known as the American Rescue Plan—is approaching passage in some form. Republicans can’t stop it, even by actually reading it out loud. The devil will be in the details, and speaking of devils . . .
The American Rescue Plan 101: Anirban Basu Explains the $1.9 Trillion Stimulus Package
I’m delivering a special webinar (I can’t help it) on Wednesday, April 7th at 1:00 EST, during which I’ll dive into the details of the American Rescue Plan, crack a few nonthreatening, sufficiently PG jokes, and answer any and all questions. I’ve given a couple thousand presentations over the years and this is the first one produced by our company, Sage Policy Group (exciting, right?). It’s limited to 500 attendees and you can kindly register at this link.