Closing The Books On 2020 Didn’t Close The Books

ADP let the cat of the bag on Wednesday when the payroll processing provider announced it believed the level of private employment had declined in December 2020. Since it wasn’t likely to have been wildly inaccurate, it set the stage for a renewed negative number in the main government payroll report released today.

According to those BLS’s Current Employment Statistics (CES), the Establishment Survey did indeed fall. During the month of December, the agency believes that somewhere around 140k payrolls had been lost, about 95k of which were in the private sector.

With renewed COVID restrictions (overreactions) being set in place, the majority of any job losses was predictably concentrated in the leisure and hospitality industry. Closing and constraining the activity at more bars, restaurants, and tourism destinations led to just less than half a million fewer payrolls. While this wasn’t surprising, it also isn’t the major takeaway.

The real issue is the whole rest of the economy (including those states which haven’t given a second look to lockdown measures) isn’t making up for it. According to these latest numbers, the system remains stuck about halfway back from the bottom; an unthinkably large deficit near around 10 million (for reference, at the lowest point of the Great “Recession”, cumulative payroll losses had been 8.7 million).

There is also the issue of time which is now adding considerably to that shortfall. In other words, the target for recovery here isn’t just to make back what has been lost since February, rather it’s to get all the way back to where the economy would’ve been had the (largely unnecessary) disruption not occurred.

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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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