By Thomas Cooley and Peter Rupert
The BLS announced that payroll employment increased by 266,000 in April. Some had (thought/hoped/wished) the economy would add something like 1 million jobs. Not only was the 266,000 addition much lower than expected, the March number was revised down from 916,000 to 770,000 but February up an additional 68,000. As vaccines have become more prevalent and cases falling, some sectors that were more negatively affected have seen some expansion. In particular, leisure and hospitality employment increased 331,000; although, that sector is still only 83% of its pre-pandemic level. Retail employed dipped down 15,300 and temp help fell 111,400.
Average hours of work rose to 35.0, matching that of January and substantially higher than the pre-pandemic readings. Employment is still about 5% below its pre-pandemic level, therefore there are fewer workers working more hours now compared to last February. Average hourly earnings increased $29.96 to $30.17.
Household Data
Employment in the household data rose 328,000, with employment of women falling 8,000 and employment of men rising 336,000. The largest one month increase in employment was by women last June, increasing nearly 3 million. Last month employment of women rose 595,000 while employment of men increased by 15,000.
Where Do We Stand
Between February, 2020 and April, 2020 employment fell by 22,092,000, one year late the economy has gained back 14,147,000 jobs, or 64%. Looking at the Great Recession it took roughly 5 years to get back 64% of the jobs. Evidently, these are very different episodes and comparisons are not very useful.
The number of job openings from JOLTS now stands as a series high 8,123,000 (the series began in December of 2000). The number of unemployed persons now stands at 9,182,000. Another way of looking at this comes from the Beveridge Curve that just plots the same data in a different way. Again the pandemic appears much different compared to the Great Recession. Why have jobs come back so fast now? One explanation is that in the current environment jobs were not really “destroyed” as in a regular recession (whatever that means!). Instead, jobs were mandated shut by government. Further, self-employment fell substantially during the Great Recession and has not recovered. It also fell during the pandemic but is now higher than the pre-pandemic level.
Initial Claims
Initial claims showed a substantial decline last week but continued claims rose. Those unemployed 27 weeks or longer fell somewhat but represents about 43% of the unemployed persons.
Inflation
The Consumer Price Index increased 0.8% over the month and year-over-year was up 4.2%. Used car prices led the way, increasing 10% over the month and 21.0% over the year. Airline prices rose 10.2%. During the webinar with Loretta Mester she made it very clear that the Fed is obviously watching and believe the recent rise is transitory. This was reiterated by Vice-Chair Richard Clarida:
These one-time increases in pries are likely to have only transitory effects on underlying inflation, and I expect inflation to return to — or perhaps run somewhat above — our 2% longer-run goal in 2022 and 2023,” he said, adding “this outcome would be entirely consistent with the new framework the Fed adopted in August 2020
Recent speech to NABE
