The Week in Review: June 7, 2021
Job Growth Strong, Not Spectacular
The U.S. Bureau of Labor Statistics (BLS) reported nonfarm payrolls rose by 559,000 in May. It’s above the 278,000 jobs added in April, but below 785,000 in March. The unemployment rate fell from 6.1% in April to a pandemic low of 5.8% in May.
Figure 1 illustrates the sharp decline in jobs and surging jobless rate at the beginning of the pandemic, as well as the subsequent recovery.
Another look at what’s happening in the labor market is provided in Figure 2. Figure 2 is a three-month rolling average for nonfarm payrolls, or the average number of jobs gained or lost over the last three months. It helps smooth away volatility and statistical anomalies that sometimes crop up in the monthly data.
Figure 2 highlights the big slowdown late last year, when COVID-19 cases jumped. Today, job creation is averaging just over 500,000 per month. It’s impressive, but is it enough?
Given incredibly strong economic growth right now, job creation probably should have been higher in April and May. That it wasn’t is probably due to the lack of sidelined workers willing to take jobs. We see it in the record number of job openings per U.S. BLS data.
Probable reasons:
Enhanced unemployment benefits
Inability to find child care
Fear of COVID
Early retirements
In resort communities, a lack of foreign students that would normally be available
From the Fed’s viewpoint, employment is rising, but the Fed believes that plenty of progress is still needed to get back to its definition of full employment. Therefore, few expect a near-term change in the Fed’s easy money policy.
If you have any questions or concerns, please don’t hesitate to let me know.
Two for the Road
In the first quarter of 2021, the number of 401(k) and IRA millionaires hit an all-time record high. —CNBC, May 20, 2021
From February to March of this year, household income rose 21.2%—the largest amount since 1959. The U.S. savings rate of 27.6% was the second-highest on record, bringing personal savings to $6 trillion, up by nearly $5 trillion from February 2020. —The Wall Street Journal, April 30, 2021
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