The Start Of A Comeback For Leisure & Hospitality

Unemployment Rate Falls Again

The unemployment rate fell 1 tick to 6.2%. The underemployment rate, the labor force participation rate, and the prime age labor force participation rate were all unchanged (they were 11.1%, 61.4%, and 81.1%). The chart below shows the speed at which the labor market will fully recover if it keeps adding the number of jobs it did in February. It won’t even get back to the previous trend by 2024 if it continues at this rate. However, there’s no reason to expect it to continue at such a slow rate. We should see many months of above 500,000 jobs added later this year.

If the labor market creates 758,000 jobs per month, it will get back to the previous trend in mid-2022. That’s what the market is pricing in when it says the Fed will hike rates in late 2022. That’s a fair estimate for the labor market, but it appears the Fed will let the economy run hot which means rate hikes won’t come next year. Powell already got out ahead of this by saying the coming inflation will be transitory. At some point the market and the Fed are going to need to agree on a timeframe.

Permanent Job Losers

Average hourly wage growth was 0.2% monthly and 5.3% yearly which were the same as last month. That’s good considering the spike in leisure and hospitality job creation. The bad news is the average weekly work week fell from 34.9 hours to 34.6 hours which is a very large drop, but followed a very steep increase. Last month’s reading was a record high. This drop caused weekly wage growth to fall from 7.2% to 5.9%. Some white-collar employees are working more because of the blurred line between work and home life during the pandemic. However, they might not actually be getting paid for this. For instance, answering email on a weekend is probably unpaid work.

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