Economy Could Take Major Hit To Start 2021 Due To This

In October, the coincident index was up from 179.5 to 181.3 which pushed the growth rate up from -0.4% to 1.9% which further supports my point that October was a good month for the economy.

Self-Employment Recovers

In the past few months, we’ve seen the business applications index explode while the overall labor market struggled to get back to normal. The unemployment rate has fallen solidly, but the labor force participation rate is still down a lot from February. Because parts of the economy such as leisure and hospitality are still shuttered, we haven’t had a complete labor market recovery.  

Those two trends have meant that self-employed job growth has recovered quicker than payroll employment growth. As you can see from the chart above, self-employed unincorporated jobs are about 2.5% off their pre-recession high, while payroll employment is off about 7% from before the recession. This might be because self-employed workers are more likely to work remotely which is good in this socially distanced economy.

Conclusion

14.5 million people are having trouble making rent and 12 million people are about to run out of unemployment benefits. The economy will probably be weak from December to February which might end up hurting Q1 more than Q4. 

Work from home trade is back, but there is only a small window for it to work as the vaccines will be distributed to government agencies starting in 8 weeks. The economy might show significant improvement starting in March. Self-employment has recovered much quicker than payroll employment. 

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