Vaccines, Cash and Economic Growth – April 12, 2021

It seems pretty obvious, at least in hindsight. Reopen the economy, give people cash, roll out effective vaccines, and job growth would soar. But an April 6 headline in Bloomberg News, U.S. Jobs Come Roaring Back, Surprising Employers and Economists, reveals that the experts were caught flat-footed.

Granted, no modern economy has ever been shut down and reopened. But, as it turned out, economists were ill-equipped to forecast the upturn. Still, investors sniffed out the robust economic recovery, albeit an uneven one, long before analysts were on board.

The U.S. BLS reported nonfarm payrolls rose 916,000 in March, almost double February’s solid 468,000. Figure 1 highlights the rebound. Since bottoming last April, the economy has created nearly 14 million jobs. But we’re still 8 million jobs shy of February 2020’s peak.

Put another way, there are still plenty of people either out of work or simply not searching for work.

That might help explain another curiosity—a very high level of job openings, the highest in two years—see Figure 2.

Last month, the National Federation of Independent Business said, “Forty percent of owners reported job openings they could not fill.”

Some potential workers are sidelined amid the need to care for family members or protect themselves from contracting the virus. Others are being enticed by generous jobless benefits.

Nevertheless, the short-term outlook for the economy is bright. As the re-opening narrative gains momentum, industries that have struggled to gain traction are likely to gain ground.

Created 2021-04-12 14:34:16