The Economy Looks Better Than It Is
The Economy Looks Better Than It Is
It has Flatlined (for now)
America added 49,000 jobs in January according to today’s BLS employment report. While that’s better than the 227,000 jobs lost in December, it would take about 201 months (about 17 years) to recover the remaining jobs lost in March/April 2020 at January’s rate. Someone born today would be a senior in high school by the time that happened. Here’s the good news—my very sophisticated economic forecasting model tells me that full recovery will arrive before 2038.
Certain segments are already on the verge of full recovery. For instance, employment in the high-wage financial services segments is down just 1% from February, which is good news for caviar and French wine producers.
On the other side of the economic spectrum, employment in the leisure/hospitality segment is down 23% percent. These are primarily folks who work in restaurants and hotels. This means that there are fewer people available to serve caviar and French wine to financiers, another indication of macroeconomic imbalance.
Relief is coming. Vaccine distribution has improved and vaccines from Pfizer and Moderna appear to be just the start. The expectation is that broader vaccination will unleash a massive recovery in America later this year as demand-side stimulus meets supply side reawakening.
You can read more of my keen insights regarding the construction industry’s employment situation at Associated Builders and Contractors.
Three Key Takeaways
The unemployment rate fell from 6.7% in December to 6.3% in January. Great news, right? Nope. Another 406,000 people left the labor force in January, and 4.3 million Americans have departed the U.S. labor force on net over the past year. Unfortunately, Orioles first baseman Chris Davis was not one of them.
While the unemployment rate fell in January, it rose for those ages 25 to 44 years. The number of unemployed persons in this age group is up 88% over the past year. Many of these workers suffered early in their careers during the Great Recession and are now contending with another economic rout. Hopefully they owned some stock in GameStop.
The median duration of unemployment stands at 15.3 weeks, up from 9.3 weeks in January 2020. Four million Americans have currently been unemployed for 27 weeks or longer, about 3.5 times more than one year ago. As these workers grow increasingly discouraged, the pace of labor force expansion will be diminished.
What to Watch
At 5:30 a.m. today, the Senate approved a budget plan for POTUS’s $1.9T relief package. What does this mean? It means they’re sleepy. It also means that there will be much wrangling during the weeks ahead, which will translate into a roughly $1 trillion stimulus package (prediction). Stay tuned.
Our 2021 Webinars and Presentations
We’re thrilled to announce our 2021 presentation, Anirban Basu and the Chamber of Data. If you’re interested in having me give a wizardly economic forecast to your stakeholders, contact us at webinars@sagepolicy.com.