April Jobs Data: Nonfarm Payroll Employment Up 266,000 But 660,000 More Working Total – AJSN Latent Demand Down 700,000 to Less Than 19.8 Million

A confusing title perhaps, but this morning’s Bureau of Labor Statistics Employment Situation Summary was as well.  It started with 266,000 net new nonfarm payroll jobs, about 700,000 lower than the only projection I saw, but more broadly the report played like 660,000 or so more were on the job.  That was the difference between March’s and April’s “number employed,” meaning that we added about 400,000 net positions either on farms or not on payrolls.  Some of the other metrics reflected a strong month, with the labor force participation rate and employment-population ratio, now 61.7% and 57.9%, up 0.2% and 0.1% respectively, seasonally unadjusted unemployment off 0.4% to 5.7%, and the count of those working part-time for economic reasons, or holding short-hours positions while thus far unsuccessfully seeking longer ones, crashed almost 600,000 to 5.2 million.  The number of those out for 27 weeks or longer stayed at 4.2 million.  Figures getting worse included the adjusted unemployment rate up from 6.0% to 6.1%, the tally of those jobless up 100,000 to 9.8 million, and the number of people on temporary layoff increasing the same to 2.1 million.  The hardest to interpret was “average hourly earnings for all employees on private nonfarm payrolls” up 21 cents to $30.17 – such gains have lately been bad, as they have reflected lower-paid people disproportionally losing their jobs, but this time it may mean higher pay in general. 

The American Job Shortage Number or AJSN, the measure showing how many new positions could be quickly filled if all knew they were truly available, had a large decline to the following:

Almost 80% of the improvement from March came from lower official unemployment, but the count of people not searching for work for a year or more contributed over 100,000.  The year-over-year comparison, with the worst employment month of the pandemic, showed a 14.5 million improvement from 34.3 million, with over 2½ million of that from statuses other than straight joblessness.  The share of the AJSN from unemployment was 42.0 percent, down 1.9%. 

On the coronavirus side, numbers were also mixed.  The 7-day average of new daily American cases gained 28% to 70,075, and that of people hospitalized rose 8% to 44,950.  The average of daily deaths, though, plummeted 43% to 749, while the total of vaccine doses administered each day gained a robust 38% to 3,349,306. 

How can we sort all of this out?  For one thing, we are no longer improving across the board.  We’re reaching limits both on people accepting vaccinations and on employers’ willingness to pay more.  We are nowhere near herd immunity, however you define that, and will not get there until our share of fully vaccinated people, still only 33%, more than doubles.  Legal reopenings, such as the one authorized for later this month in New York City, will help, but only to the extent that customers return.  The rest of the year, then, is murkier than I thought it was a year ago, and does not look as spectacular.  For now, though, the turtle did take a real step forward.

The Pandemic: Where Are We Now, and How Can We End It?

On this topic, my objectivity is limited by the milestone I reached yesterday.  It’s now two weeks since my last coronavirus vaccination, so the chance of my getting infected is minimal.  Almost all other American adults can choose to join me. 

How encouraging are our recent Covid-19 statistics?  Looking at the charts of 7-day averages of new cases, deaths, and hospitalizations, on the New York Times website, we see different shapes.  The count of new cases stopped drastically declining on February 21^st with 66,439, wiggled around mostly downwards, and this past Wednesday reached 52,605.  Hospitalizations bottomed out on March 25^th with 39,903 and have been sloping up ever since, with the most recent figure, Tuesday’s, 44,015.  Deaths ended their steady decrease on April 12^th with 721, and have been slowly dropping since, to 712 on Wednesday.  Vaccination doses administered went up sort of a craggy mountain to summit April 13^th at 3,384,387, and have subsequently been falling, to reach 2,630,407 yesterday.  All of these numbers show a maturing, so to speak, of the recovery, with disease results down but not out and the tally of vaccinations, including the Times’s figures (conflicting with others who say it is higher, claiming 43% with at least one dose but 13% more needing another) indicating that we are beginning to run out of customers. 

Worldwide, we are only now reaching all-time highs in new daily cases, and are almost at that level with daily deaths.  As of yesterday, the map looked like this, with darker colors meaning higher new per-capita infections: 

As you can see, Europe and South America are generally doing the worst. We have read about India setting national records, but yesterday’s 349,378 all-time-high average daily new cases there is barely one-third of the highest United States percentage.  The American vaccination rate, even if it levels off, should assure that our country will continue to improve.

Otherwise, what’s in the coronavirus news?  Per Rebecca Robbins in the April 25^th New York Times, “Millions Are Skipping Their Second Doses of Covid Vaccines.”  A discouraging piece, with the major causes being concern about side effects, snags with places running out of specific products between doses, and decisions that the second shot was unnecessary.  The good part is that 92% of people having  one Pfizer or Moderna dose have returned for the second, but 8% not is still too high.

One idea to get vaccination rates higher was presented by Ben Mathis-Lilley in the April 23^rd Slate: “There Is a Glaringly Obvious Way to Get Everyone to Take the Vaccine.”  Per the subtitle, “it’s money.”  An Oxford professor and a Democratic presidential candidate endorsed payments of $1,000 and $1,500 respectively.  The author bounced around the idea, ultimately agreeing with it, but two of his counterpoints, that it would encourage people to wait for payments for such things in the future and that it could get them thinking it is riskier than it actually is, along with concern about stiffing or going through $100-$150 billion for each 100 million Americans already vaccinated, carry the day.

Now is the right time for “As Virus Rages Abroad, Biden Promises to Ship Millions of Vaccine Doses” (Sheryl Gay Stolberg, The New York Times, April 26^th.)  Already our production capability is way beyond the number of doses we need, so we can and should continue making them for free export.  We can’t be expected to provide all of the vaccine other countries need, appeals to guilt are inappropriate, and whining about sending less being like “showing up to a four-alarm fire with an eyedropper full of water” is grotesquely inaccurate, but we can make a massive difference, by saving possibly millions of lives, just by keeping the factories going. 

My clear answer to Aaron E. Carroll’s April 27^th New York Times question, “When Can We Declare the Pandemic Over?”, is that it will end for us individually.  Per Carroll, “normal has never meant “perfectly safe,”” “a safer world will likely still have Covid-19 in it,” and “if we can get the pandemic to a point that a vast majority of people who become sick get well, that the number of people who are hospitalized and dying is low and that this really isn’t any worse than your average seasonal respiratory virus, then it’s time to start seriously relaxing our restrictions.”  We should expect and encourage a falling-away of government regulations, with individual businesses choosing what rules to have and, of course, consumers doing what they think is right. 

And as for us?  In all, if you are not getting vaccinated because of religious beliefs, that is the price you pay for them.  If you are holding back because you believe some sort of conspiracy, such as a recurrence of the generations-ago Tuskegee abuses, you are a fool.  If you think one dose is enough, you are practicing medicine without a license.  If logistical problems have stopped you from getting your second shot, you need to aggressively overcome them.  If you fear general side effects, you have the cart in front of the horse.  If you are waiting for some kind of herd immunity, you are misguided.  If you think that because our last president did not take the pandemic seriously you do not need to be protected, you are worse than that.  If you have a true medical reason, you have my sympathy.  The pandemic is over for me – will it soon be over for you?

What Should and Shouldn’t Our Government Do? Nine Possible Policy Changes Briefly Assessed

 A year’s worth of Covid-19 has given us at least a year’s worth of proposals.  What are they and how good would they be?

In the August 11^th New York Times, per Lauren Frias, “It’s time to implement a 4-day workweek, Andrew Yang says.  The pandemic has made it important now more than ever.”  From a former Democratic presidential candidate and current one for New York City mayor, this thought, now in its second half-century, would only have a chance if each day would be ten hours or more, as businesses are getting thoroughly acclimated to unpaid extra time from their fearful cubicle workers.  That isn’t worth as much money to them than they think, but it’s too beneficial to them to agree to relinquish.

From the same source, we have a thought of more recent vintage (“Andrew Yang Wants You to Own and Sell Your Data,” Hannah Klein, Slate.com, June 23^rd) that may get traction someday.  It’s hardly nonexistent now, as in 2020 “Facebook paid some of its users $5 for voice recordings in order to improve its speech recognition technology.”  That general idea was formally proposed in Congress the previous year by a Republican, one John Kennedy of Louisiana, so if bipartisanism were more valued we could hear more on it.  It also has plenty of merit, and could well end up law.

“How Can Biden Bring Back Manufacturing Jobs?  Weaken the Dollar,” posed Noam Scheiber in the March 1^st New York Times.  Sure, that would get us there, but at the cost of more expensive imports and lower overall prosperity.  Each political side has its own detrimental subconstituencies, and this one, rooting for a return to the 1950s and 1960s, is harmful to the party now in power.  Helping a small minority of Americans at the expense of the majority, by propping up otherwise noncompetitive businesses, is not what we need.

Another losing Democratic idea was well and fairly debunked by George F. Will’s “Will:  Student loan forgiveness is a gift to the well-off,” reprinted in The Roanoke Times on February 11^th.  Aside from insulting this blogger, who chose to pay off his five-figure university obligation twelve years ago and worked during previous college and graduate school experiences to prevent more of that, this intensely proposed notion would help those with higher income (as 56% of such debt “is owed by those with masters or professional degrees, and almost 35 percent of loan balances are owed by individuals in the top 20 percent of income distribution”), and, beyond that, would work to worsen our situation where “the nation is overproducing college graduates.”  Let “the typical college graduate with debt ($28,500) … retire it in 20 years with $181 monthly payments.”  Most of such people can, and I suspect the doctors and lawyers could handle that as well.

“Who Will Pay to Get America Back on Its Feet?,” asked Kara Swisher in the January 27^th New York Times, and answered it with “an immediate, one-time “wealth tax” covering the last year.”  A direct if crude and grabby way of using the pools of money in private and corporate hands, it is tempting, as it would let us, when during the pandemic “those who have sacrificed the most so far are the disadvantaged,” “flip that script,” but is it right?  Debatable – and, with the merit here, we should do just that.

Easy to agree with on the surface is “Bernie Sanders supporters call for postal banking,” by Brittany De Lea in the December 8^th Fox Business.  In such a system, here from 1911 to 1967 and in place in France, Germany, and a dozen or more countries worldwide, “local Post Office locations would be authorized to provide financial services,” possibly including “low-interest loans, checking and savings accounts, debit cards, check cashing, bill payment, ATM services, online banking services and electronic money transfers.”  It is a true populist idea, and would help numerous unwanted-by-banks people now subject to high fees and rates get personal business done locally.  It has, though, two large downsides:  the expense, as such would not be profitable, and conflict with probable removal or consolidation of small local post offices.  Once again, a worthy idea that could be explored and appropriately accepted or rejected.

“Should the Feds Guarantee You a Job”?  This question, here from Eduardo Porter in the February 18^th New York Times, has been asked for most of the past century, and its best answer is still “no.”  Our government is marginally extended at best with much less massive and dauntingly complicated efforts, which would need to deal with such matters as promotions, poor workers, and transfers as well as establishing and maintaining tens of millions of constructive assignments.  There are better ways, even those in place now, of keeping people working.

We can all see the existence of “America’s Amazon Problems” (Ross Douthat, The New York Times, April 20^th), but can we agree on what they are?  Douthat tried to show how what is really an antitrust issue is fundamentally different from those before and didn’t quite get there, leaving us with the unsettling prospect of punishing a company for superbly providing what its customers wanted.  We’re never going back to using dozens of online vendors for routine products, let alone widespread in-person shopping on old-fashioned Main Streets, and trying to legislatively accomplish either is futile and damaging.  Perhaps Amazon should be broken up by separating its online hosting services from its interest-conflicting product offerings, but not because it has been too successful.

That brings us back to Andrew Yang, and to his signature policy change proposal.  Early in the coronavirus era, Ishaan Tharoor maintained in The Washington Post that “The pandemic strengthens the cast for universal basic income” (April 10, 2020), though that has now faded.  Three weeks later, Chris Hughes sought to explain in The New York Times “Why Americans Need a Guaranteed Income,” but had little new.  On March 3^rd we had Paul Davidson’s USA Today “Is universal income closer to reality?  Cities from Stockton to St. Paul are already testing monthly checks for residents.”  We wouldn’t know from these efforts, as they, being directed to people with lower income, are not guaranteed income but welfare.  We can argue the merits of giving more money to those who need it, but “universal” means just that.  A real test, perhaps by randomly choosing a zip code and giving all residents, say, $1,000 per month, would take more political will than we have seen.  Otherwise, it’s still too early for universal basic income, but not to soon to discuss and socialize it – we may discover within our lifetimes that we must decide, like it or not.  The same goes, though to a lesser extent, for the other policy changes described here – so let’s move along. 

The American Jobs Plan, With Some Infrastructure Too – Where from Here?

We can’t accuse our president of not trying to do enough.  His first 100 days were barely two-thirds over when he proposed what Peter W. Stevenson called in The Washington Post’s April 1^st “The Five-Minute Fix” his “second proposal for a signature piece of legislation – this time focusing on more than $2 trillion in proposed spending on infrastructure and jobs.”  But is it the bill we had expected, and why is it so cluttered?

Per Stevenson’s graphic, the bill’s “transportation infrastructure” section includes $115 billion for “highways, bridges, and roads” and $42 billion for “airports, water transit and ports,” adding up to $157 billion or about 7%.  If we add the $85 billion for “public transit,” we’re still less than 11%, and would need almost half of the $80 billion intended for “passenger and freight rail” for heavy infrastructure to make up one-eighth of what Joe Biden wants to spend.  It’s reasonable to add, under Stevenson’s “infrastructure at home” category, the “clean drinking water” ($111 billion), “high-speed broadband” ($100 billion), and “electrical infrastructure” (also $100 billion), to reach $592.375 billion or 26.3%. 

The rest is projects of different kinds.  The bill offers $174 billion for “electric vehicles,” which would be marginally acceptable if our federal government, subsidizing and otherwise pushing them for over 40 years with only 4% of auto sales, including hybrids, to show for it, finally gave up if those numbers didn’t greatly change by, say, 2030.  I see $50 billion for “infrastructure resilience” (suspiciously vague), $45 billion for “transportation inequities” (subsidies for largely black neighborhoods?), and $30 billion for “other,” but no true infrastructure there.  The “at home” section also includes $28 billion of “other,” and extends infrastructure’s meaning to include “affordable and sustainable housing” ($213 billion), “public schools, early-learning centers and community colleges” for $137 billion (perhaps worthy, but in an infrastructure bill?).  The same can be said for the remaining four items, “research and development” ($180 billion), “manufacturing and small business” ($300 billion), “workforce development” ($100 billion), and “home and community-based care for elderly and disabled people” ($400 billion).

There is no problem with paying for maintenance we need, but the $1,658,625,000,000 proposed for other things works out to more than $5,000 per American.  I can see why it could be the best technique to bundle things together, to allow congresspeople to vote only once and assure enactment of the parts of the bill they like, but is it the fairest to our citizens?

Here we have several different schemes.  The core infrastructure proposal, that almost $600 billion, could, after some tweaking, get true bipartisan support and could remind us of the days when legislation often passed with healthy majorities.  The others could each stand alone, where Biden would need to choose whether to force them through with little or no Republican support or to soften their content.  That could, at least potentially, give us some idea on what is really important to our representatives and, hopefully by extension, to ourselves.  It also would prevent people from being required to accept, for example, yet more Amtrak subsidies, about which late columnist Charley Reese said a quarter-century ago “either there is a market for intercity trains or there isn’t,” in order to get clearly needed bridge repairs.  It would also let Congress assess the relative value of social programs, and adjust the dollars involved, as they determined which is more important for the 2020s United States, such as more care for older people or better local schools.  It could also facilitate some well-needed debate about how much the jobs required should pay.  All of this work could be bolstered by comments from constituents as well as by more incisive editorializing. 

Separating the ideas seems most logical and effective to me.  If I am wrong, what am I not understanding?  Please let me know. 

Banks, the Stock Market, Interest Rates, the National Debt, Inflation, Taxes, Bonds, and the Fed – What’s Happening?

It’s time to take a look at what might be called the large factors and institutions in our economy.  Here are a series of articles which may, or may not, give you insight.

One, “The Looming Bank Collapse” by Frank Partnoy in the July/August 2020 Atlantic, made a case for a new vulnerability.  Before “the financial crisis of 2008,” which “was about home mortgages,” “hundreds of billions of dollars in loans to home buyers were repackaged into securities called collateralized debt obligations, or CDOs.”  These instruments contained paper for mortgages of varying qualities, ranging from those solid and current to others on which no more money would ever be paid.  After “Lehman Brothers went under, taking the economy with it,” these CDOs “fell out of favor,” but “demand” for them shifted to “the CLO, or collateralized loan obligation,” each example of which includes “loans made to businesses – troubled businesses.”  If these instruments collapse in large numbers, per Partnoy they could take the rest of the economy along.

Something we have long implicitly known was articulated in “The Hutchins Roundup,” issued by Brookings on October 15^th, namely that the “Stock market is less representative of the economy than it was in the 1970s.”  Two researchers found that publicly traded companies’ shares of total nonfarm payroll employment dropped from 41% in 1973 to 29% in 2019, a cause of fewer people below the top 1% holding securities.  That also may be a root of the market’s strength, as those accumulating more and more money have less need than others to sell.

Maybe I’m missing something, but isn’t “The Puzzle of Low Interest Rates” (N. Gregory Mankiw, The New York Times, December 4^th) easy to solve?  The author found six “hypotheses” which “might explain the decline in the natural rate of interest,” five of which with merit, but only grazed the main explanation, that we are awash with capital, and that, combined with low business interest in large projects, means money usually sits in place with low demand.  This situation may change if taxes dramatically increase, and the upcoming infrastructure effort creates millions of jobs, but for now don’t be surprised if the Dow Jones Industrial Average continues to go up more in a typical month than balances in money-market savings accounts rise in a year.

“How much should we worry today about the rising federal debt?,” asked David Wessel in a December 14^th Brookings report.  Not much, he said, as our government is paying less than 1% interest on its 10-year obligations.  It would do well though to follow the prudent individual spending practice and “pay for things today that we consume today” such as defense, Social Security payments, and most salaries, but that “we should not hesitate to borrow at today’s very low interest rates for public investments that will pay off in the future,” including infrastructure and human development.  However, low borrowing costs only “buy us some time,” and eventually we will need a reckoning.

Is it true that we have seen “Biden and the Fed Leave 1970s Inflation Fears Behind” (Jim Tankersley and Jeanna Smialek, The New York Times, February 15^th)?  Yes, and that was the right thing to do.  As a corollary to money pooling up, inflation is much less of a risk than it was 40 years ago, and rates of 3% to 4% would hardly be disastrous.  With pent-up demand soon to explode, and, per “Janet Yellen Drops Hints” by Andrew Ross Sorkin et al. in the same publication on February 23^rd we can expect further stimuli, we’re facing a real test of this theory, but we have a long way to go to see a real problem. 

How are bond prices doing, and can we see “What the Bond Market Is Telling Us About the Biden Economy” (The New York Times, February 23^rd)?  Per author Neil Irwin, bond returns are not well, as many pay below inflation.  With our presidential administration carefully watching them we can expect generally freer spending, but “the line between too hot and just right is a narrow one,” meaning Washington’s willingness to fund more things may quickly change – if rates do indeed increase.

As for the Federal Reserve itself, we saw that chair “Jerome Powell Promises Not to Take Away the Punch Bowl” (by Neil Irwin, also in the Times, March 17^th).  Powell denied the central bank would let forecasts alone, such as what Irwin called “a veritable boom” later this year, stop its monthly $80 billion bond purchases, but would “wait to see actual data.”  That is another optimistic indicator – so let’s get ready to party hearty!  In the meantime, we need to stay safe until our coronavirus independence days – two weeks after our last vaccinations – have arrived.

Fine Progress in March, as Almost All Employment and Coronavirus Numbers Improve Including AJSN, Down Over 700,000 To a Deficiency of 20.5 Million Jobs

This morning’s Employment Situation Summary from the Bureau of Labor Statistics was easy to assess.  We did far better than the forecasted 650,000 net new nonfarm payroll positions with 916,000.  Seasonally adjusted and unadjusted joblessness improved 0.2% and 0.4% respectively to 6.0% and 6.2%.  There were 9.7 million unemployed people, or 300,000 fewer than a month before.  The reduced count of those on temporary layoff included 200,000 of those and is now at 2.0 million.  The two best measures of how many Americans are either working or officially jobless, the employment-population ratio and the labor force participation rate, grew 0.2% and 0.1% and are now at 57.8% and 61.5%.  The number of those working part-time for economic reasons, or keeping short-hours propositions while looking thus far unsuccessfully for full-time ones, lost 300,000 to 5.8 million.  The figure which we now want to get worse, since its height means many low-paying jobs have gone away, average private nonfarm payroll earnings, lost 5 cents to $29.96 per hour.  The sole major statistic not to improve in March, the count of those technically unemployed for 27 weeks or longer, rose 100,000 to 4.1 million.

The American Job Shortage Number or AJSN, the metric showing how many positions, on top of those now open, could be quickly filled if all knew they could get them, had a good month as well, as follows:

 

 

Two-thirds of the AJSN’s 765,000 improvement over February was from lower unemployment, with over 80% of the rest from a reduced count of those wanting work but not looking for it for a year or more.  The share of the AJSN from those officially jobless, 43.6%, was down 0.9%. 

On the Covid-19 front we made superb headway as well, even though the numbers here do not reflect the full effect of massively greater dose manufacturing and distribution.  Per The New York Times, from February 16^th to March 16^th, the seven-day average of new American cases fell 32% from 81,217 to 54,959, while that for deaths was off from 2,183 to 1,303 or 40%, and hospitalizations lost 43% from 73,187 to 41,660.  The same average of daily vaccinations gained 42% from 1,716,311 to 2,435,037. 

It all looks like a great month, and it was, but what’s the catch?  It’s that we can’t forget how far behind we still are.  Compared with March 2020, when the pandemic had already added almost two million to the AJSN, we are still 3.1 million higher, and the difference is broad-based.  Other employment measures, such as the naggingly high new weekly jobless claims most recently at 719,000 or triple a typical pre-pandemic reading, would still be out of place as recently as early last year.  We are doing the job admirably on both fronts, but we have a long way to go.  Accordingly, the turtle, while taking a tendon-taxing step forward, can still see way in front of him territory he already passed through.

 

No Post This Week

 Due to a serious family problem, I will not be posting this week.  Expect me back with the AJSN on April 2nd.