I'm not sure old Jonny Paycheck had 2020 in mind when he sang, "Take This Job and Shove It." Regardless, too many people became dependent on government assistance during the pandemic and the economy is working its way out of the current labor shortage - hence the lyric, "I ain't workin' here no more." The Jobs Report last week was extremely revealing and actually showed the labor market is healing. May's job gains of 559,000 would at any other time in history been a stellar number. Yet, the gain was shy of the market's expectations by nearly 100,000. There were many positives in the report that need fleshing out. For one, "civilian employment" (which measures small-business start-ups) rose 444,000 in May. Employers are paying more wages for slightly less hours worked, making getting a job quite enticing. Nearly half the states in the U.S. have ended extended pandemic unemployment benefits, which represents about 40% of the labor force. Some economists expect payroll growth to accelerate in the next few months.
The rest of the economic data was positive overall last week. Manufacturing and Services data looked good and improved month-over-month. Weekly Jobless Claims marked the 5th consecutive week of declines and moved below 400,000 for the first time since the pandemic began. And, Unemployment dipped to 5.8%, the lowest since the pandemic began. This figure is key as we near the Fed's employment target of 4.5-5% unemployment to begin tapering bond purchases. In fact, the Fed stated last week they will begin to unwind Corporate Bond purchases and Bond ETF purchases over the next several weeks/months. The market must come to grips with the fact that dovish Fed policies are nearing an end - which means the economy is nearing full health.
Florida is now going to release weekly COVID numbers, versus daily numbers, for the first time since the pandemic began. Florida is averaging less than 2,000 daily cases and saw 31 deaths on of Friday. According to CDC data, deaths in the U.S. so far in 2021 from other typical causes - heart disease, pneumonia, diabetes, cancer, and sepsis - dwarfs COVID deaths by 4-to-1. Last month alone, deaths due to heart disease (250,790) as compared to COVID (7,694) were telling. As we begin to move on from the pandemic, we look to signs the consumer is getting back to normal. Dining in restaurants, hotel occupancy, and car travel are at or near 2019 levels. Air traffic is currently only about 75% of 2019 levels and Box Office receipts are no where near 2019 levels. Retail Sales are actually out-pacing 2019 levels, but inflation, supply issues, and labor shortages continue to be roadblocks.
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