The Week in Review: March 8, 2021
Reopenings Fuel Job Growth
Hiring accelerated last month as restaurants and other firms in the leisure and hospitality industry reopened amid a drop in daily COVID cases.
The U.S. Bureau of Labor Statistics (BLS) reported that nonfarm payrolls jumped by 379,000 in February, almost double the consensus of 200,000 offered by Bloomberg News. Once again, the wide miss highlights the difficulty of economic forecasting in today’s environment. The jobless rate fell to 6.2% in March from 6.3% in February.
More good news—the private sector added 465,000 jobs, with most of the difference occurring because of losses in education, according to U.S. BLS data.
Most of the gains occurred in one category, with leisure and hospitality (L&H) adding 355,000. Restaurants and bars, which reside within the L&H category, accounted for most of the job gains—286,000.
The L&H industry has been disproportionately affected by the pandemic, social-distancing restrictions, and the public’s fear of going into businesses that require close contact. Employment in L&H is still 3.4 million below where it was in January 2020.
The economy must recover about 9.5 million jobs to get back to pre-pandemic levels. L&H accounts for over one-third of those jobs. For service-based industries that require close contact, success of the vaccines and herd immunity are the best forms of stimulus.
Meanwhile, in an interview with The Wall Street Journal on Thursday, Fed Chief Jerome Powell reiterated he sees no changes in the Fed’s easy money policy.
As Bloomberg News summed it up, “Powell was given numerous opportunities to lean against the recent rise in yields and he never took the bait. He just stuck to the same message he's had for months: The Fed won't hike until we see maximum employment and sees a sustained rise in inflation, and that's that.” As far as Powell is concerned, “It's not that complicated.”
It is nagging worries about the Fed’s easy money policy, coupled with another big stimulus bill, that are raising inflation fears in some corners and lifting longer-term Treasury yields.
If you have any questions or concerns, feel free to reach out to me or Tyler.
Two for the Road
Mining bitcoin requires users to solve complex mathematical equations using high-powered computer setups. The electricity consumption used in the process leaves an annual carbon footprint equal to the nation of New Zealand. —CNBC, February 22, 2021
When analyzing how the S&P 500 performed under varying levels of core inflation, equities performed above average in an environment where core inflation was between 1% and 4%. —Morningstar, February 21, 2021
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