No Doubt, There Really Will Be Two “L’s” In Payrolls

What the BLS reported today was another sharp slowdown of the economic rebound, one that’s been indicated and catalogued a thousand times over already. The economy is still on its upswing, but that doesn’t mean what it might seem; positive numbers are a necessary but by themselves insufficient condition for full, complete, and meaningful recovery.

The headline Establishment Survey estimated that 245k payrolls were added back during the month of November. This would have barely qualified as a decent number had it occurred at any time during the depressed labor market 2008-19. Showing up, however, in November 2020 with the economy still denied about 10 million payrolls (an amount that remains larger now than the worst month of the Great “Recession”), this is not good at all.

The Household Survey declined by 74k last month, not unusual for this more volatile alternate labor market figure. More importantly, the CPS estimate for the size of the labor force also declined – again. According to these computations, exactly 400k former workers dropped out, telling the BLS they aren’t even bothering to look for work anymore.

This means that, going back all the way to June, only 535k workers have rejoined the labor force of the more than 8 million which had left it during March and April (after just 3.4mm came back in May and June). Though the data covers the economy through November, only half that enormous decline has been recovered even though reopening has been ongoing for seven months.

American workers are not liking what they are seeing.

The primary reason for this unusual (at least when looking at business cycles historically; since GFC1 in 2008, these “L” shaped recoveries are now the base expectation) trend is obvious. The government may have subsidized private business and the private economy unlike anything seen before, but this isn’t the same as stimulating the private economy back to its original state.

The monthly change in private payrolls was nearly the same taken from the Establishment Survey data as it had been estimated from ADP’s sources; the latter, as noted earlier this week, gained just 307k while the former, from the BLS, increased 344k. Both further corroborate the material economic slowdown dating back to around June thus excluding any kind of statistical or random anomaly.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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