Friday, March 4, 2022

Biden Boom continues in jobs market for February

We figured Friday’s jobs report would look good, given that Omicron faded as a concern in February and unemployment claims had continued to stay at or near 50+-year lows.

Sure enough, the Biden Boom is continuing in the jobs market.
Total nonfarm payroll employment rose by 678,000 in February, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, health care, and construction…..

The change in total nonfarm payroll employment for December was revised up by 78,000, from +510,000 to +588,000, and the change for January was revised up by 14,000, from +467,000 to +481,000. With these revisions, employment in December and January combined is 92,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)
That big jumps in restaurants and retail are very good signs, and an indication that perhaps more people were going out some more as Omicron faded as a concern. But also not a big jump on the goods side of the economy, with construction, manufacturing and mining (!) all showing strong increases.

February is also a good month to look back at how things have gone, as February 2020 was the pre-COVID peak of employment. While we are still 2.1 million total jobs below that mark (but only 1.4 million in the private sector), we’ve made a lot of progress in since the depths of April 2020, and 6.7 million jobs have come back in the first full 12 months of Joe Biden’s tenure in office.

It's even more remarkable when you look at that chart and realize that are adding jobs at an increasing pace - higher than we had in the last 6 months of the Trump era, a time when there was a lot more slack in the economy and labor market than we have today.

Job Growth, US
Aug 2020 - Feb 2021 +3.014 million (+502,333/month)
Feb 2021 - Aug 2021 +3.177 million (+529,500/month)
Aug 2021 - Feb 2022 +3.495 million (+582,500/month)

If we get 4 more months at this rate, we'd be back to our pre-COVID high before the 4th of July. I’m not counting on that, as it is possible we are near capacity after 940,000 deaths from the virus and many others retiring or otherwise getting out of the rat race.

But still a pretty amazing place to be compared to a year ago.

If there’s one drawback in this jobs report, it’s that wages flattened out after several months of decent increases.
Average hourly earnings for all employees on private nonfarm payrolls, at $31.58 in February, were little changed over the month (+1 cent), after large increases in recent months. Over the past 12 months, average hourly earnings have increased by 5.1 percent. In February, average hourly earnings of private sector production and nonsupervisory employees rose by 8 cents to $26.94.
But note that last sentence, the avg wages of non-supervisors (aka “regular workers”) went up by 8 cents vs 1 cent. While that doesn’t seem like much, it reiterates a trend we’ve seen in the last year across many sectors where everyday line workers are getting bigger (percentage) raises over the last 12 months.

6.65% isn’t that far off where 12-month inflation will likely end up for February, and that 6.7% increase doesn’t count the stimulus checks, child tax credit payments, and other assistance that have given a boost to many Americans' incomes in the past year.

UW's Menzie Chinn also reminds us that for those who were working in February 2021 (granted, a lot fewer people than today), their raises were significantly outpacing inflation. So even with the added demand and price-gouging cutting into gains over the last 12 months, real wages are still up compared to where we were pre-COVID.

That’s not to say inflation isn’t a problem and something that affects people’s feelings on the economy (it clearly is). And $4-$5 gas is going to be a jarring hit to people that likely leads to some adjustment in spending and hiring habits. I get that.

But I am also saying that the information in the jobs report and in last week’s income and spending report indicates that people continue to get jobs, are getting paid at them, and are spending money at stores and businesses. The economy of the first 2 months of 2022 was very strong, and let's see what changes in habits and hiring happen as the economic effect of Russia's invasion of Ukraine hits US shores.

Which tells me that the first full year of the Biden Administration’seconomics has done pretty damn well, and given that we are likely near full employment, now is when government should do their part to have workers lock in those gains. THis can be done by encouraging them to organize and increasing the state and federal minimum wage while discouraging corporations and coked-up Wall Streeters from profiteering off of the higher prices and speculation.

And Dems should run on those ideas this Fall. That’s the way you start to reorder an economy that has benefitted far too few in the last few decades. Yes, we're still in a Biden Boom, but we also can’t be complacent with a burst of post-COVID activity when we can do so much more to make things right for the rest of the 2020s.

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