Businesses reportedly defied numerous projections that indicated layoffs and reduced hiring across the economy by adding 517,000 new payrolls last month.
Why does the us jobs report indicate one thing when practically all other data indicate the opposite?
Giving the report and the last three years’ state of the economy some context can help a lot with this.
US jobs report
First off, even after taking employment rates into consideration, the labor market has still not fully recovered to its pre-pandemic levels.
Compared to pre-pandemic rates, there are around 2.6 million fewer individuals working now because to the persistently low labor force
participation rate and employment-to-population ratio.
Is this a worrying factor?
In such a setting, we would anticipate stronger than usual employment growth; nonetheless, January still outperformed forecasts.
Another factor to take into account is the fact that changes in nonfarm payrolls frequently lag those in the real economy, so it is not unexpected for other indicators to decline first.
And the devastating impact the epidemic had on the labor market is probably making that effect worse.
The US jobs report that the market most likely impacted by the lockdowns—leisure and hospitality—is still feeling the aftershocks.
A fifth of all new jobs were created in that sector last month, further demonstrating how unequal the labor market recovery is and how some sectors are still unable to reach pre-pandemic employment levels.
With some businesses still attempting to catch up with the changes from the most recent significant economic upheaval, the regular labor market lag is probably being amplified.
Why did we get such a large job report when the economy is slowing?
The Covid pandemic was a huge shock to global economies, and the US labor force is still feeling the effects of historic job losses,
unexpected shifts in consumer behavior, disjointed supply chains, and efforts to return to normalcy.
Since 2021, the employment recovery has been historically strong, with monthly job gains exceeding anything seen previously.
The January jobs report was more complicated than usual because it included annual updates to population estimates as well as revisions to employer survey data.
Following a strong jobs report, traders believe the Fed will raise interest rates twice more this year.
It’s nothing personal: layoffs are a way of life
The news of the layoffs had already leaked, and anxiety was high across Goldman’s global offices.
Few industries are more prone to layoffs than finance, where a bad year in the markets — or a poor performance review — can lead to job loss.
According to a 2021 report from the Office of the New York State Comptroller.
The securities industry has lost jobs 13 times in the last 30 years, or nearly every two years.
According to Wall Street employees, being laid off is part of an unspoken but well-known rule:
The pay is competitive — a first-year associate at Goldman Sachs.
For example, earns more than $150,000 per year before bonuses — but comes with the understanding that being laid off is a constant risk.
Excellent job numbers
The employment figures released on Friday elicited joy in some quarters and fear in others.
Giddiness because January’s unemployment rate of 3.4% was the lowest in the United States since 1969.
Putting to rest the nihilistic doomsayers who would have us believe we’re on the verge of economic collapse.
In order to advance their agenda of more tax breaks for the wealthy.
Foreboding because of the fear that low unemployment will push up wages.
Increasing inflationary pressures and possibly prompting more interest rate increases.
Eventually pushing us into the recession that, yes, the pessimists keep predicting.
Let’s explore the other picture
Indeed, the U.S. Bureau of Labor Statistics (BLS) establishment survey for January shows that employment gains were strongest at the bottom of the wage scale, in leisure and hospitality, which increased by 128,000 jobs.
In other words, for every high-tech worker who lost his job, two jobs paying significantly less than the median wage became available.
What’s more, guess what?
The average hourly wage for all employees on private, nonfarm payrolls increased by ten cents per hour, or 0.3%, last month.
That means that average hourly earnings increased by 4.4% over the last year, which is not only not inflationary.
But also not keeping pace with rising living costs.
But wait, there’s more.
Despite the 128,000 new jobs in leisure and hospitality, employment in this sector is still 495,000 jobs, or 2.9%.
Lower than it was three years ago this month.
Furthermore, when the leisure and hospitality category is broken down into its component parts.
The food services and drinking end of things—primarily restaurants and bars.
Claimed the lion’s share of job gains, while accommodations gained only about 15,000 jobs.
Which information do you trust more during these moments of anomalous data:
the monthly US jobs report showing healthy growth, or practically everything else showing a tiny decline?
Bottom line: the new job numbers are (mostly) good for the economy, but largely irrelevant to the campground industry.
So there’s no rational reason to hunker down, but if you’re going camping this summer, bring plenty of cleaning supplies and tick spray.
This is the key question at this point in establishing the economy’s current state and predicting its future.