Feb 5 Jobs Report

The February 5, 2021 jobs report showed that in the month of January the economy added only 49,000 jobs. While any job growth is welcomed in this environment the numbers below the surface show a much worse situation.

The first layer to peel back is the seasonal adjustments. Seasonal adjustments in normal times show the hiring of workers in the fall to prepare for the holiday season and the firing of them in January as the season ends. In a typical January job declines are expected so the seasonal adjustment allows for these layoffs to not skew the data. If every season 100k jobs are lost and this year only 51k jobs are lost, the data would show a 49k gain, for example. With COVID throwing a wrench in the seasonal economy that isn’t accurate this year. The seasonal hiring didn’t happen to the extent we are used to so the accommodating view on firings in January is too accommodating. When looking at unadjusted data January showed a slight decline.

The second negative piece in this report is where the job gains came from. in this report government jobs increased by 43k whereas private payroll only grew by 6k. Even worse, in private jobs the growth came almost entirely from temporary work and was offset by many categories. In order to have a robust recovery the economy needs long-term jobs not created by the government.

Revisions also had a huge downward impact to this report. December was already a bad month but revisions added another 87k jobs lost, fully erasing any job gains we saw in January. On top of the December revision, November was revised down as well. Its job gain was overstated by 72k. Totaling a 160k jobs lost compared to the 50k gain we had in January.

Lastly, the January report showed the unemployment rate fall from 6.7% to 6.3%. That looks curious as 50k new jobs should not contribute to a 4pt drop in a country our size. The real reason for this was a dip in the labor force participation rate. In January more workings left the labor force to be not counted in the unemployed as prolonged lockdowns distressed many from even looking for a job. All told 406k people stopped looking for work in January. Government benefits for staying home surly helped some people to consider staying away.

Overall the January jobs report shows the economy is on thin ice. Though stimulus is likely to come as a supposed remedy to this report it will only further keep people away from the job market. The only real way to get this economy going is for the governments to open up and allow the people to freely conduct business. No stimulus can make up for a job and all the benefits that come from being productive. As the working class is not at any high probability to be hurt by the corona virus, it is time to abandon the politically motivated lockdowns. Which even scientists are starting to say, do not stop the virus.