U.S. employers created 379,000 new jobs in February. The news caused much celebration and some concern for those who fear inflation.
Note that these numbers have many statistical limitations. Even if they’re just right, trends over time mean more than any individual report.
That is, this affects me. Not so much for the data itself, but for the way that some people are excited about it.
Hope we are on our way to COVID-19 control in the US (though certainly not in the rest of the world). The vaccines are proving to be as effective as the clinical studies have shown. The production capacity grows. President Biden says there should be enough for every American by the end of May.
And yet … a version of the coronavirus become Spread as long as we allow. He doesn’t care about the economy. It just does its viral thing.
This much anticipated economic recovery, and the jobs that come with it, couldn’t get very far if we relax too soon … and the employment data suggests some of us are doing just that.
The real story behind the latest U.S. job numbers
This pandemic hit the labor market like an atomic bomb last spring. The US alone lost 22.4 million jobs in March and April 2020.
Since then, the US economy has created a total of 12.9 million jobs. So we’re still shedding 9.5 million jobs from where we were.
And it can be worse. When this all started, the average US employment growth was about 200,000 a month.
So the economy has lost nearly 12 million jobs would Now job creation had continued at the previous rate.
The pandemic has not only destroyed the job market. It safely took out species of jobs – mainly those that require non-essential face-to-face contact.
In the official reports, most of these jobs fall into the leisure and hospitality category. It includes restaurants, bars, and hotels – all large employers of relatively low-wage workers.
An apparent reversal made up much of the fuss over last week’s report. Leisure and hospitality (L&H) alone created 355,000 of the 379,000 new jobs.
However, RSM chief economist Joseph Brusuelas pointed out that this was an easy payback from the past two months as the L&H segment lost 523,000 jobs.
The February job gain was top heavy in one industry and it just brought that industry back to where it was a few months earlier, which wasn’t great.
The other bright spots in February were retail with 41,000 jobs and education / health with 44,000 jobs. These three industries created a total of 440,000 jobs in a month that was only 379,000.
Economist Dave Rosenberg noted the arithmetic: this means that other industries must have eliminated 61,000 jobs. Not what we want to see.
It gets worse. The same report shows a sharp drop in hours worked. It looked small, but it adds up, as Rosenberg explained.
“I haven’t seen anyone talk about the elephant in the room. This was the 0.9% workweek decrease in the private sector, and the decrease was in the areas (retail, leisure, and hospitality) where The main feature of the report was the decrease in the work week from 34.9 hours in January to 34.6 hours, which, my friends, equates to over a million job cuts !!
“In other words, if the work week had been held at the January level and the total labor input into the economy in February had been the same as stated in this report, payrolls would have decreased by 700,000!”
The data show a demanding economy Fewer Work, no more. That wouldn’t happen if a hiring boom took off.
Source: Rosenberg Research
February was just a month again. A lot can change, and hopefully become change as the virus threat subsides and consumers regain confidence. But it will take some time.
And maybe longer than many think.
As mentioned above, vaccination progress accelerates. We are now in a race to prevent a variant-driven spring thrust from delaying economic recovery.
We’ll have better chances if people only continue to use the precautions we’ve all learned for a few more weeks. The job report suggests that many do not.
Why do restaurant owners hire so many workers? Maybe because The restaurant traffic is increasing.
Some restaurants are pretty safe, but we know that exposed gatherings in poorly ventilated places are a major source of infection. More visitors are attending the spread of the virus and may make job restoration self-limiting if it triggers another surge.
The next month is crucial. Keep your fingers crossed.
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