Tech, Oil, Staples & March Job Creation

The March labor report should be fantastic. We have been discussing this for a couple of months now. The data is finally aligning with our prediction. The chart below shows historic BLS non-farm payrolls since February 2020. As you can see, after an initial quick recovery from the late spring to early summer, job creation has plateaued. There is no benefit to having a lower unemployment rate if the labor force participation rate stays low. The past 5 months have been a struggle. Some bearish economists refuse to spot the ‘elephant in the room’ which was the 3rd wave of COVID-19. With that behind us, job creation will fully recover. We might even be near full employment in 6 months.

The alternative data tracker calculated by JP Morgan has been highly correlated with BLS data since the summer. It has spiked in the past few weeks. In the Diffs model projects, there were be 925,000 jobs added in March. Remember, last month economists showed how long it would take the labor market to recover its pandemic losses if job creation continued at its February rate. If they do that with March’s data, the recovery time will be more than cut in half.

The main thing we have to worry about now is getting the vaccine distributed in Europe and emerging markets. The 7 day average of daily deaths is 975 in America. We should be at a new pandemic low within a few weeks if the trend continues. Unfortunately, in Brazil the 7 day average of new cases is at a record high. The 7 day average of daily deaths has spiked to 2,349 which is also a record high.

The Spending Burst Is Coming

We are starting to see the first evidence of a spike in spending growth following the stimulus in March. Ignore the yearly spike in spending growth because that is mostly due to much easier comps. Last year at this time the 1st wave of the pandemic was gripping the country. Now America is on the precipice of exiting the pandemic later this spring.

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