A Weaker Jobs Recovery Seems To Be Unfolding

In a post I wrote in late January, I noted the headwind that an increased regulatory and tax burden is likely to have on economic growth. Last week's jobs reports provided further evidence that a slower economic environment may be taking hold. As the chart below shows, the level of employment seems to be trending sideways, and is approaching the trajectory of the slow job recovery following the financial crisis in 2008/2009.

In order to recover jobs to the pre-pandemic level, the economy would need to add 10 million more individuals to payrolls and after last week's employment reports, this looks like it could be a slow process.

In the near-term though, if the elevated personal savings rate is any indication, a burst of demand could unfold to satisfy pent up frustration resulting from the pandemic lockdowns. However, the heightened regulatory burden provides the potential for a slow recovery after 2021.

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