For the Financial system, the Current Doesn’t Matter. It’s All In regards to the Close to Future.

It is generally considered bad journalistic practice to start an article this way, but it has to be said: the new job numbers that the Department of Labor released on Friday morning don’t matter.

These numbers can sometimes be unimportant as any economic report is only part of the story and is subject to error rates and future revisions.

But in this case, it’s more than that. This job report doesn’t matter because the economy is at an important turning point. What matters is not what has happened in the last few weeks, but where things will end in a few weeks.

The report that 379,000 jobs were created in February and the unemployment rate fell to 6.2 percent is good news. It’s a better result than January and better than forecasters expected.

But the economy is still in a deep hole, with nine million fewer jobs than a year ago, or around 12 million fewer than where we would be if employment growth had continued before the pandemic last year.

Think of a simple model of today’s economy as follows: A huge, complicated assembly line was shut down for a year and is now coming back online. Different stations on the assembly line come back at different speeds. The number of end products currently rolling off the line is less important than the details of the progress (or not) all of these various stations are making towards full capacity.

In normal times, the total employment growth reported on Friday would be a blockbuster number. However, continuing to create jobs at this rate would still mean a two-year return to pre-pandemic employment levels. The question is whether job creation will accelerate in the coming months as more Americans get vaccinated and return to normal behavior, especially when it comes to travel and entertainment.

A worrying sign of the new employment figures: State and local governments appear to be cutting jobs en masse. They cut a total of 83,000 jobs, around 69,000 of them in the education sector.

Will many of these jobs return when schools are at full capacity by fall? The Senate Biden Pandemic bailout plan provides for $ 130 billion to reopen schools safely and another $ 350 billion to support broader state and local budgets. If that money proves appropriate for the job, the February downsizing could turn out to be a temporary slip up.

Updated

March 5, 2021, 7:20 p.m. ET

In February, some of the sectors most directly affected by the pandemic saw huge job gains, particularly a 355,000 increase in leisure and hospitality jobs, largely related to restaurant jobs.

That’s good news, but restaurant employment is still 16 percent below last February’s level, a two million job hole. Widespread vaccination that allows people to return to restaurants safely is the only way those jobs can return.

This week’s news that Merck will help manufacture Johnson & Johnson’s coronavirus vaccine is bigger business for unemployed waiters and line chefs than the 286,000 bars and restaurant jobs added in February.

The longer-term effects of the crisis remain bleak. The rise in employment in February was entirely due to the layoffs – the number of these temporarily unemployed workers fell by 517,000. The number of permanent job losers remained constant at an astronomical level – 2.2 million more than a year ago.

That raises questions about which jobs destroyed during the pandemic will return. Are there certain behavior patterns and business models that have disappeared forever? And what will the people who once worked in these companies do now?

That is the hardest question for the future. It’s easy to describe the way back for jobs in schools and restaurants. However, real economic health means these 2.2 million people are returning to the ranks of the workforce too, and that could take more than just a shot in the arm.

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