It was over when it was over: Afghanistan and the U.S.

There was a time in the not too distant past when two United States presidents faced the threat of communism from Southeast Asia: one young, and charismatic, had initially heeded the advice of his elder predecessor, who warned him not to get involved in Vietnam. He was followed by a veteran senator, who transitioned to the presidency upon the death of the younger, and eager to be seen as brave.

The two presidents, of course, are John F. Kennedy and Lyndon B. Johnson; the former reluctant to get involved, on the advice of his predecessor, Dwight Eisenhower, but later prodded by military chieftains to at least provide advisors, until he was forced to answer later, by an anxious media, as to why a US military helicopter was shot down.

What type of “advising” was that, they asked.

Later, in November of 1963, when more “advisors” were sent to Vietnam, Kennedy asked his top aide, on the way to that fateful trip to Dallas, “find a way to get us out of Vietnam.”

Johnson conscious of his legacy, as well as history, was reluctant to pull troops out, inc case he was second guessed by that same history, and communism roiled across the ocean, but agonized, all the while, kept them in; and, ultimately in the face of demonstrations and chants of “Hey, hey LBJ, how many boys did you kill today?” outside the White House gates, influenced his decision not to run for a second term, ending what historians would have recognized as a brilliant presidency.

The recent exodus from Afghanistan by President Biden came to mind, as we surveyed the damage from the planned pullout, and as America and its leader, has been jeered at and poked, what also comes to mind is the age old discussion of what role the US should play on the world's stage; an idea shaped by its dominance in two World Wars.

When President George Bush brought US  troops to Afghanistan it was in response to Al Qaeda’s direct attack on the World Trade Center in New York City, that unforgettable day as dust and debris covered people and streets became Ground Zero, an attack that brought global sympathy. 

It also brought a 20 year old commitment to a land and culture that few understood, and most countries had abandoned, at any level of partnership, or colonialism, Russia as one example, and took the world’s superpower to a place far beyond its initial goals to one of nation building.

With billions of dollars, and thousands of troops, and tragic deaths on both sides the US soldiered on enduring some victories, and many losses, that gave more hope than actions, and the military reports often hid the central question of what was happening and for how long would we be there.

Biden, taking following the exit plan of former President Trump, became enveloped amidst a plethora of advice, some pessimistic, some optimistic, about the Afghan’s ability to defend itself.

It also became curiously aligned with the timeline of Vietnam, and reluctant to admit a sad reality of inability, the military, according to The New York Times, “believed they would continue to fight for a time after the Americans left.”

Based on that assumption, it “took two years for a collapse after the withdrawal of troops and financial support. Optimists believed the Afghan military, with American funding, could last nearly as long. Pessimists thought it would be shorter,” they added.

The former view became the dominant one, and the resulting chaos to try and get allies and embassy personnel out of the country was the end result, while the scene echoed those from Saigon where people held dangling leads to helicopters.

Optics in this case ruled the day, with images of hundreds of Afghans fleeing, on foot and by auto, hand luggage dangling from their arms, fearful that their lives would change for the worse under the Taliban, based on its previous record of intolerance, abuse, and violence, especially towards women and girls. 

Adding to the desperate images of Afghans clinging to the fuselage, and even on the wings,and in the wheels of American cargo transporters, the images are heartbreaking, but don’t tell the whole story.

Fear and fact are often opposite ends, and as many have noted the Taliban waged a well calculated takeover learning both from the lessons of the West and their own knowledge of the country and its culture, steadily taking small provincial capitals, “they simply melted into the population to begin planning what would be a 20 year insurgency,” in an earlier report from The New York Times.”

They also gave money to the underpaid, or not paid Afghans, “secured border crossings, and assuaged with cultural knowledge a “population that is so tired, and weary of conflict they agreed to flip and support the winning side so they could survive.”

While these optics have been devastating to America’s image and Biden, the fallout from American allies, including our oldest, and who claim a special relationship with us, was exemplified by former British Prime Minister Theresa May who labelled the actions of the United States, as “incomprehensible,” while also railing about her successor, Boris Johnson, at the absence of the British as a backup, but the latter seemed dubious at best, especially with the absence of NATO.

Michael McCaul, Republican congressman from Texas has said that Biden has “blood on his hands.” And, both the House and Senate have called for congressional investigations.

While the ratings for Biden who had hovered near 50 percent, will slip, and whose criticism will be relentless, especially from hardcore militarists from the GOP, is a given, no one who occupies the Oval Office runs for the presidency, for their health, but the 78 year old chief executive seems prepared to take it on the chin, and said on Friday according to The New York Times that he “promised to bring home any American still trapped in Afghanistan, calling the evacuation effort for Americans and vulnerable Afghans “one of the largest, most difficult airlifts in history.”

But he acknowledged that he did not know how many Americans were still in the country, or if they could ultimately be brought out safely.

“Let me be clear: Any American who wants to come home, we will get you home,” Mr. Biden said, before adding, “I cannot promise what the final outcome will be, or that it will be without the risk of loss.”

He also added, said the Times, and sought “to give a sense of how many people had been flown out of the country in the days since Afghanistan’s collapse, Mr. Biden said that some 18,000 people had been airlifted from the country since July. This week, he said, Afghans — including women leaders — and American journalists — including staff members of The Times, The Washington Post, and The Wall Street Journal — had been safely removed from the country.

Mr. Biden said that he would commit to airlifting Afghans who had been helpful to the 20-year war effort, but said Americans were his first priority.”

July Jobs report is a blockbuster for US economy

 

In what has been termed a blockbuster, the US Department of Labor released its monthly jobs report for July and revealed that American employers had added 943,000 nonfarm payroll jobs, far exceeding the earlier ADP report of 330,00 from private employers, and while Labor and ADP use a different methodology, most observers, economists, and, of course, the White House, were ecstatic.

Many are saying that this is the post pandemic swing that they were waiting for,and it also serves to silence, in part, Biden Administration critics who have openly carped that the rising inflation was attributable to increased spending, and of course, those stimulus checks. 

Conversely while the report shows that the Biden policies are working, a little GOP carping goes a long way, for its base.

It also takes the heat off Federal Reserve chair, Jerome Powell, to diminish stockpiling bonds and securities in its reserves, as the increased job activity creates less of a vacuum.

It should be noted that while the goods news was welcome, it was gathered as is standard, from data collected in the first two weeks of June, and does not show the effects of the Delta Variant, that has coursed through some parts of the country, creating havoc on local economies, as they grapple with prevention strategies.

Acknowledging this, President Biden said, “we will doubtless have ups and downs along the way as we continue to battle the Delta surge of Covid,”but added,  “What is indisputable now is the Biden plan is working, the Biden plan produces and results ,and the Biden plan is moving the country forward.”

Gus Faucher, chief economist at PNC Financial Services in Pittsburgh, told The New York Times, “This is a great report, very solid in terms of job growth and the decline in the unemployment rate.”

Showing the way forward was the continued growth in leisure and hospitality, where one third of the gains were, (due to  increased vaccinations), as public consumption transferred from goods to be enjoyed at home, to services and activities outside the home; and, to prove the point restaurants and bars last month added 253,000 jobs, and as airline travel increased, hotels and resorts added 74,000, while entertainment and recreation added 53,000 jobs.

Coming as a surprise to some was the increase of 221,000 public school jobs that some see as a harbinger of the much hoped for September increase of office workers returning from remote work, at home, to school children doing the same.

The figures, “could be inflated by seasonal adjustments and the way COVID 19 upends hiring cycles,” reported The Hill, and school openings in the Fall could be affected by a number of issues, such as the presence, or absence, of mask mandates, as local leaders grapple whether to have staff and faculty fully vaccinated.

Heralding the good news also included the increase of employment of racial minorities, with Blacks seeing an increase to 9.2 percent from 8.2 in June.

Black workers, reported CNBC, “represent about 13% of the US labor force, but 21% of all workers in transportation and warehousing,[while] Hispanic workers are 17% of the labor force, but comprise 24% in the leisure and hospitality industry.”

It’s not hard to see how this translates to wages, and they increased “with average hourly earnings increased by 11 cents in July and 4 percent year over year,” added The Hill.

A closer look at wages shows a gross disparity,”when comparing the wages of white men to women across demographic categories. White women make 19% less, Black women nearly 40% less, Hispanic women 43% less, and Asian women make 7% less,” CNBC concluded from their research.

Economists have stressed that since people of color were overly affected by the economic disaster, brought by the pandmeic, any subsequent gains are proportional

Overall, the labor force participation rate was nearly the same at 0.8%, but there were some surprises, with manufacturing and construction showing modest increases, and still bearing the brunt of,”hidden goods process and a shortage of components like semiconductors,” surmised the Times.

In contrast the Institute for Supply Management showed accelerated growth both for June and July, 60.1 in June and 64.1 in July; and, which had shown some alleviation in earlier months and the growth supports Powell’s assertion that the bottlenecks in supply and demand would ease.

Just before Labor released its report, “Timothy Fiore, chair of ISM's manufacturing business survey committee, noted that "supply and demand dynamics appear to be moving closer to equilibrium for the first time in many months." Part of that could be because spending is rotating back to services from goods, added Reuters.

Manufacturing accounts for 11.9% of the US economy.

Overall the US has 9.2 new job openings with 9.5 million people still unemployed. And, in that vein there are still many employers desperate for employees, and even professional slots are still open, baffling the former.

Some, mainly GOP leaders, have stated that extended unemployment benefits are the fault, yet, as we have seen, in many areas, while not all service people are looking for a change; for some, those benefits provided  a  cushion for those looking for better wages, working conditions, or location.

Statistics are near nil for benefits as the culprit, for as Barrons recently noted, “70% of  people with benefits live in states that haven’t yet cut the additional payments.”

While July provided blockbuster numbers, all eyes seem to be on September for a real change in jobs and consumer behavior, but that remains an open question.

Feds keep rate, but creates a "new normal" for mandate

 

With the conclusion of the Federal Open Markets Committee on Wednesday, the resulting virtual press conference focused on answering questions on tapering the trunk fulls of asset purchases designed to keep money in the US pipeline.

All eyes had been centered on this question, for days, preceding the announcements and the $120 billion in government backed bonds, and $40 billion in mortgage backed securities gave economic pundits and economists a run to press on Thursday.

Set against the background of inflation which had hit record highs of 5.4 percent in a year over year comparison; it was the highest figure since 2008, and created a sense of urgency among the FOMC and increased pressure on Chair Jerome Powell, whose sense of caution gave alarm amongst those whose confidence in him was weakening.

With consumer spending driving the economy as usual, there was a heightened sense that there might be an overheating, with people sitting on piles of unspent cash during the nationwide lockdowns, and federal stimulus checks fattening those reserves.

Sandwiched between the inflationary worries, and the actions of the FOMC, observers were also concerned as consumers switched from spending on goods to services, and with the increase of vaccinations for Covid, travel and leisure, further increased inflationary fears.

Powell had the unenviable task of going in one direction, tapering the pile, or defining a new direction. With the latter he defined a new normal of accepting higher inflation, to make up for the periods when it was less, and the decision to stall tapering towards the Fall, or even later.

This gave him, and other members, who might have been uneasy about the timeline, a softer cushion to land on; and, one that allowed the Fed to be consistent with its twin mandate: keeping inflation, at or near 2.0 percent, and focusing on full employment.

Taking the virtual bull by the horns, at the press conference, Powell added that “the economy has made progress to all two goals.”

As predicted there were some fears that the past might be prologue with the memory of the 2013 model of tapering “in modest, equal amounts over the course of 10 months,” according to the Wall Street Journal, but noted the subsequent reaction: a spasmodic market..

No one really expected the Feds to raise its key interest rate, from its current 00.25 %, and Powell declared, “it's’ not something that is on our radar screen right now.”

Much like a Greek Chorus, there were the cries by some to do an equal reduction of both Treasuries and mortgage backed securities, to stem the tide of high home costs homes.

That appeal was nixed when Powell said buying long for these assets was the key. And, if that was disappointing to some, then his reaction to the increasing bottle neck of the supply chain and its attendant problems; (for example, the dearth of semiconductors), had him stating that in time, these problems would resolve themselves, proved to be equally dispiriting to many economists.

Hovering in the background was King Covid, but now its cousin The Delta Variant became an increasing concern for many, especially as the Fall was expected to bring workers back to the office and their children back to in person learning.

His reaction? “We’ve kind of learned to live with [it].” 

In a veiled remark Diane Swonk, chief economist of Grant Thornton said to the Journal if that was the case then his leadership should compel him to consider “tapering by year’s end.”

Consistent with his prior remarks, but further urging caution, Powell said, “there’s absolutely no sense of panic.”

Asking all to accept this, including the new normal of higher inflation, he said, simply, that it, “will be more persistent.”

Was this enough to stem the fears of the American public who in a recent poll said that 54 percent of Americans felt the economy was tanking? That said, only time will tell.

"I" is for inflation and that causes concern for US

 By now, many of you have noticed higher prices, be it the humble hamburger at McDonald's, gas at the pump, to even mid level restaurant menus, as they steadily erode our budgets, And, on the larger scale those tasked with keeping inflation at bay are finding a barrage of suggestions, criticisms, observations and even sly commentary.

Reaching consensus, or even understanding what the future might bring to both the US economy, as well as consumers. And, for those that are depression era survivors, a shrinking population, the days ahead may seem less daunting as memories of high prices and hoarding come to mind, but for Generation Xers, those skills and methods are unknown.

Some have opined, such as Chicago Booth School of Business, Michael Weber that "Central banks and shoppers are living, to some extent, in different worlds," and their focus is different and are "forming expectations on the basis of those."

With uncertainties about returning to the offices of pre pandemic America, this is another worry for those burdened with school debt and mortgage payments, especially those living in large urban areas, dealing with survival in a changed America where 7 million jobs were lost due to Covid. 

Recent reports have showed, however, that some consumers, after months of lockdowns, are not complaining of higher restaurant costs, so overjoyed they are at being able to gout and dine, and socialize with others.

On Wall Street as well as Main Street the key word is "transitory, but The New York Times noted recently that the "word is losing traction." But, it also stated that "inflation is running at a 13 year high" and while the White House claims that the rise in inflation is temporary, others are not so sure.

Jamie Dimon of JP Morgan Chase said recently, to the Times, that it's " a little worse than the Fed thinks"; still others say that the time has come to accept a higher level of inflation, beyond the targeted and mandated 2 percent that the Federal Reserve has, and in that respect a 2014 survey did cite that income inequality, the new normal has forced economists to take a long range view.

Consumer spending, the driver of the American economy hit the headlines with an increase of 5.4 percent, according to the Consumer Price Index, a feat in and of itself.

Weber notes, while seeing higher prices, and with some complaining, many in America aren't watching the inflation ball; and in fact, he and others "surveyed more than 20,000 Americans in 2018 and asked what they expected the Fed's inflation goal to be.Fewer than 20 percent answerd correctly, while a whopping 40 percent thought that the Fed was targeting 10 percent inflation."

The correct answer is 2 percent, a standard in an undergraduate macroeconomics course, as part of the twinned mandate of the Federal Reserve, the other being full employment.

Spreading out a bit, is Avraham Shama writing in an opinion piece for The Hill said that setting a “monetary or fiscal policy based on it could hurt the economy” and as a contributing factor to understanding the dilemma points to the pandemic both pre and post as the tipping point for understanding both the process, and his warning.

If the temptation is there, then changes in consumer behavior from dining out, plane travel and moving to the burbs are in order, then taking a look at Federal Reserve policy points and reliance on judgement, and an ability to change course might be the better course.

Tacking somewhat to the right is Axios who gives some sly digs to the Biden Administration and also Fed Chair Jerome Powell, and sees him as both indecisive and naïve in his handling of inflation, and hints at other matters, in its short estimation, and characteristic bullet points, seeing him as not knowing where to look next for the future, which it labels as “evolving.”

From the corporate side there is Conagra Brands and Pepsico, says Bloomberg who have “signaled that higher costs will be more than a blip,” and that costs “from raw ingredients to labor to remain substantially more expensive in coming months.”

Just behind these words consumers can expect the higher costs to be passed onto them. The bottom line as it were.

While there has been some relief in the used car market, it’s not hard to reckon that higher prices, or shrinking packages, and deceptive packaging to be the norm, so that the consumer may think that they are getting more than they get..

In their Dealbook analysis the Times offered some opinions that give some weight to the future, with most saying we have to deal with it, to others saying that accepting a higher level of inflation may be the course, with others using a historical trajectory to give some sense of direction towards policy action.

Austan Goolsbee, professor of economics also of the Booth School of Business favors temporary, and is a believer in the “potential” of the economy, or in other words what it sustains at full employment, citing the 1960s as the fulcrum for overheating.

He also sees the US as closer to the 1990s through the mid 2000s and “?none of which ignited sustained inflation despite unemployment rates well below today’s.

Add to his optimism a gain in jobs, then his opine takes the fright out of some observers.

Going in an opposite direction was Jason Furman, a professor of economic policy at Harvard University who questions the long term who sees inflation longer term than others, but sees a it settling “down at something more like 2.5 to 3 percent, but cautions against Fed overreaction, causing a recession, and subsequent market adjustment to right the ship, but notes that economic hurts could occur.

If this all seems too wonky for you, then consider that an increase in job and wage gains is a good event, and indexing can help for those on the lower wage scale;  some economists and academics see signs of 7 percent for the 3rd quarter, and as demands shift, a downward wave of 3.3 percent in the second quarter of 2022, reported the Wall Street Journal, with Treasuries yielding downward, trends could be far worse, with caution being our watchword.

Updated 13 August at 4:15 p.m. CDT

 

 

 

 

Time to rejoice: June Jobs report hits 850,000

 

Exceeding and in some cases, surpassing predictions for a robust job gains for the month of June, Friday’s report from the US Labor Department, gave most observers and economists a high, with the figure of 850,000 nonfarm payroll jobs, a jolt in the arm for the American economy, and salve for the worried nerves of all, from the White House to the Federal Reserve who feared another moribund report, like April, that sent many economists and politicians reaching for painkillers.

Instead many are now reaching to pop a cork of bubbly for news that sent the US recovery on a straight path towards a recovery, albeit slower than many might have wanted. But, some say that reach may be too soon, with many employers still panting for employees; even with some cities hitting a $15.00 per hour minimum wage.

As we have seen before, many potential workers are waiting for in person learning to return for schools, to avoid the headaches, challenges and expense of child care, while others are fearful of working in tight spaces, and taking crowded public transportation to the workplace; while still others are afraid of the new Delta variant that is spreading across the country, especially in the South, where vaccination rates are much lower than the rest of the country.

There was good news since there was a drop from those who said Covid was a factor in looking for a job, with 1.6 million in June, down  from 2.5 million in May.

This is reflected in the labor force participation rate of 61.6 percent; and, an unemployment rate, the marquee rate, as we prefer to call it, of 5.9 percent, yet that does not reflect a total picture that includes those that want to work full time, but are stuck in part time jobs. 

”These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs,” the report noted, and were up 229,000 since February 2020.

The report also shows an uptick from 6.4 million not seeking a job in June, from 5 million before the pandemic baseline of February 2020.

Previous months have shown the dramatic decrease of women in the workforce, as they were forced to leave their jobs for child care and remote instruction supervisors for homebound learners, but in June, there was no significant increase in female workers, staying at 56.2 percent versus 67.5 percent for men.

Black workers stayed at 9.2 percent unemployment, higher than those of whites at 5.2 percent.

Nevertheless there is hope amidst the clouds: "This strong labor market performance – despite persistent hiring strains – is likely the start of a series of stellar reports that will underpin the strongest US economic performance since 1951 this year," Lydia Boussour of Oxford Economic, said to The Hill.

All things being partisan, the GOP has blamed President Biden’s policies of extending financial help to those in need, but there is no clear evidence that this is a factor in those hard to find employees and the fear of inflation. And, while prices have increased due to consumer demand, the tradeoff between goods and services reflects increased rates of vaccination and local government pushing vaccination.

The effect of withdrawal cannot be seen for June, since the report has a cut off, meaning that those twenty six states whose governors cut the benefits, won't be seen until the July report, so the blame game can continue with Republican opponents.

Along with the overall increase certain areas showed dramatic increase and leading again, was the leisure and hospitality field, with a gain of 343,000, showing a near phoenix like rise in an area that was devastated in the early days of the pandemic,

With the increase of vaccinations many are abandoning their bread machines and cake pans plus homemade cocktails to go to restaurants and bars, which can be seen with 194,000 of the increase in June for bars and restaurants.

The arts also showed promise with 74,000 jobs and by fall should show a dramatic increase with promised Broadway and theater openings, thrilling investors and audiences alike.

That old catchall category of professional and business services showed 72,000, and social services showed some gains, with glimmers of hope for 25,000 in children’s day care.

Possibly related for some, is the desire to “work remotely at least some of the time,” reported The New York Times, And, they cited “a Randstad survey of more than 1,200 people, 54 percent say they prefers a flexible work arrangement that doesn’t require the to on site full time,” nodding in the direction of Covid fears and, as of yet, an uneven return to in person learning, especially for elementary school students.

Previous reports, such as ours, have also shown that many “would-be workers” are re-evaluating their options from labor intensive, and physically challenging jobs, such as restaurant servers and cooks, to hotel maids and maintenance workers.

In fact the report shows that “job leavers” -- “those that left their previous jobs, that is, unemployed persons who quit or voluntarily left their previous job and began looking for new employment—increased by 164,000 to 942,000 in June.”

For temporary workers there was good news reported by Tom Gimbel, founder and CEO of LaSalle Networks, in Chicago who told CNBC that he has seen a fast change from temp to perm in “areas of accounting, admin, clerical and human resources,” and that “it’s happening at a 50% higher rate than it was preCovid.”

Incentives abound, including sign on bonuses ,once reserved for executive and high  earning professionals, but now seen in restaurants, and, in June, “Southwest Airlines plans to raise minimum pay to $15 an hour for about 7,000 employees citing the need to attract and keep workers as the airline industry continues fro recover from the pandemic,” according the the Associated Press, and taking effect on Aug.1.

AP also noted that many “companies are making adjustments to their offices to help employees feel safer as they return to in person work, like improving air circulation systems or moving desks further apart.”

The bottom line for most workers is pay, but concerns are across the board, with those looking at both the Fed and the rise in inflation, as concerning. But, they may have to wait a bit, because, as Labor noted:

“Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $30.40 in June, following increases in May and April (+13 cents and +20 cents, respectively). Average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents to $25.68 in June. The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages. However, because average hourly earnings vary widely across industries, the large employment fluctuations since February 2020 complicate the analysis of recent trends in average hourly earnings.”

It’s easy to hum, “we’ve only just begun” as Karen Carpenter once crooned, but that seems to be the reality for a country that struggles with post pandemic reactions, as well as vaccination fears.

Feds change course and plan rate increase in 2023

Jerome Powell

Wednesday's news from the Federal Reserve’s two day meeting gave a surprise to many observers and government officials when they announced a “sooner rather than later” rate increase at the end of 2023, to be exact, by 0.6 % from the long held zero percent.

Statements at the press conference from Fed Chair Jerome Powell caused 10 year Treasuries to hit 1.569 percent from the previous 1.498, and caused the Dow Jones to drop to 0.8 percent lower according to the Wall Street Journal.

While the news was a surprise, it was tied to a strong recovery for the US economy and fears of higher inflation that has crept, some say alarmingly fast, with increased consumer spending.

People have been sitting on a pile of accumulated cash, from the pandemic lockdowns, stimulus checks, and their actions have been supported by increased vaccinations; a marked departure from a few months ago, and the Fed noted in a later statement that, “Progress on vaccinations has reduced the spread of Covid19 in the United States.”

It seems that the Fed is taking both caution, as well as recognition of these economic realities which have others concerned about inflation seeing price increase on services, rather than goods, as consumers are now ready to travel, with restrictions lifted by state and local governments, coupled with the increased vaccinations.

“We wouldn’t hesitate to use our tools to address that,” added Powell about fears of inflation.

The current thinking, from she and Powell, is that inflation will be allowed to increase, with an expected decrease; but, the Labor Department has noted from their own consumer price index, that in May, there was a 5% increase from a year earlier, with current averages at 3.4%.

While employment is one of the two mandates for the Reserve, (along with keeping inflation at 2%) there have been mixed numbers; and with April and May, adding a total of 837,000 jobs, many are unsure of the future.

The response from the general public has been muted; but, there are still 7.6 million jobs less than February of 2020, the baseline measure, causing even more concern in the Biden administration.

As we previously have noted, some of those jobs may never come back and the increase of retirement is pulling down labor force participation, said Powell, and the Journal noted, “Some 2.6 million people retired between February 2020 and April of this year, according to estimates from the Dallas Fed.”

Powell noted that the unreliability means that predicting will be difficult, and said, “So we don’t know exactly what labor force participation will be as we go forward.”

There are still those who are reluctant to enter the job market for fears of crowded office spaces, equally crowded forms of public transportation, lack of child care (which might improve in the Fall) and a desire to change jobs for higher wages and better working conditions; all of which, for some have been eased by the $300 in extended unemployment benefits, but which some lose as early as the weekend as 25 states are ending them, as they feel it is an impediment to seeking employment.

Thursday did see an increase in weekly jobless claims by 37,000 to 412,000, from the past week, but the four week average has set a new normal level of 395,000, the lowest since March 2020, when the virus first surged in the US.

It’s obvious that the US economy is on an uneven road to recovery post pandemic, but it’s also true that the changed landscape has upended previous thoughts and assumptions about what can be believed and changed, or in the words from a previous editorial meeting, “This isn’t your grandpa’s recovery.”

 

May Jobs shows a rocky climb to recovery for the U.S.

 The May Jobs Report released on Friday by the U.S. Labor Dept. showed a 559,000 increase in non farm jobs, a plunge from the 671,000 that most economists had predicted. Still, it’s a good deal better than April’s disappointing plunge of the now revised 278,000 which sent shockwaves through Congress, the White House and academia.

Nevertheless a disappointment is still a disappointment, and when the economy is still mired in the midst of a global pandemic, the numbers released give a shaky report on the progress of progress for an American recovery.

Nick Bunker, economic research director for North America at the jobsite Indeed, described for The Wall Street Journal that, “It’s a bit like a rocket where takeoff has been slightly delayed, but takeoff will still happen.”

“It’s a middle-of-the-road report,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank, of the May numbers to The Wall Street Journal. 

“It is disappointing relative to where we were a few months ago, where we were anticipating you could see a million-plus type prints over these coming months. We have had to ratchet down our expectations about what job gains are likely to be going forward,” he added.

The bright spot as many cities eased covid restrictions is that leisure and hospitality jobs shot up to the tune of 292,000 jobs. But, that is still an area that is desperately seeking new hires and is begging as many of the potential workers are women, and especially women of color, who are either still helping young children with remote schooling, and juggling housework along with meal preparations; while still others, maybe buoyed by the extended unemployment benefits of $300 per week, are weighing their options for higher wages and less physically demanding work.

Still others are afraid of contracting the virus and those without cars may not want to ride crowded busses and trains to jobs, where working elbow to elbow, they face the risk of the virus, or any of its mutations.

The rate of unemployment for women is 5.5 versus 6 percent for men, and an overall 5.8 percent for May.

What may occur in the Fall if the double dose shot of vaccination continues, and schools reopen, is that more women will return to those jobs, and ease the burden of child care, as well.

One significant factor is that the average leisure wage of $18.09 is well below that of private sector wages, reported the Journal.

There are some signs already as gains in restaurants, hotel, and school employment rises a bit. But the trend will have to continue to see real gains.

Black employment continues a high, this month of 9.1 percent unemployment, the highest of all groups with 7.3 percent for Hispanics making for a challenge that is historically unmet, often with the oft used phrase, “When whites sneeze, blacks get a cold.”

Most concerning is that the labor force participation rate is relatively unchanged from 63.3 to 61.6, and the gender and racial gap reflects much of that.

Adding to the mix, Julia Pollak, a labor economist at Ziprecruiter.com, to The New YorkTimes said “there was a mismatch between the type of jobs being offered and those being searched for. More than half of seekers want remote work, while only 10 percent of employers are offering that option.”

The good news is that much of the current wage increase is from a 15 cents wage increase bringing overall pay to $30.33 in May, but that it is due to an increase in younger workers, especially teens, willing to work at lower wages, as their share of the workforce increases.

While all of this is a complicated picture for most to process, it’s important to realize while the road ahead is guaranteed to be rocky, the U.S economy of unfilled jobs is lower than the 10 million previously reported, and those whose job loss was attributable to Covid is now 16 percent less that it was in the last two quarters.

Adding to the increase in average gains of employment for the second quarter of 540 positions, as cited by the Times, coupled with those long term unemployed people, (more than 26 weeks) the corresponding drop to 3.8 million, approximately 40 percent of the total, then there is indeed welcome news for May, albeit uneven.