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

By November, assuming the same rather lackluster job growth average (private payrolls) as had been estimated from the 18 months prior to February 2020 (during the globally synchronized slowdown of Euro$ #4), there would’ve been something like 1.5 million new private payrolls added after February up through November. Bare minimum to keep with even slowed population growth.

However, at these reduced monthly rates, the labor market, while still improving, is barely matching what “normally” would be happening and thus not even catching up to the cumulative total deficit any longer – and stalling here at, again, greater than the Great “Recession’s” worst case.

And in that case, it was only for a temporary period; the economy fell off sharply late 2008 and early 2009, and though it never fully recovered it didn’t stick around near the bottom month after month, year after year. What we find here is just such a frightening prospect: an economy that experienced 2009-levels of job losses that appear to be permanent, at the very least more than short run (just ask the OECD).

Yet, this is being priced as inflationary good news? No. Risk markets, even bonds (the leveraged short specs), to a small degree, are betting that none of this will matter once the vaccine begins working its way (slowly) through the economy. On top, these awful labor numbers are expected to further stiffen the resolve of politicians who will come riding to the rescue with a fiscal deluge.

All the Economists say so.

It’s a more comforting scenario and pleasing to the default setting of human evolution (this kind of huge negative can never happen, and then when it does we immediately believe this kind of thing could never happen again) than the alternative; that the economy actually has been permanently impaired now twice (economic factors we’ve been warning about this whole time). In that case, what good is a vaccine? How do more subsidies replace businesses that are never coming back? Like 2008, what happens afterward when – permanent shock – an economy just shrinks?

We were still dealing with the fallout from the first time this had happened to the global economy, and now, as all the data points, it repeats this time even more than that first “L.”

That’s how you get share price valuations which make those of the dot-com era seem cute.

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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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