14 February 2021
Source: Bloomberg & Momentum Global Investment Management
What this chart shows
This chart shows the total number of US nonfarm payrolls (in millions) which is a measure of the number of people in employment in the US, excluding agricultural workers and workers in local government, private households or non-profit organisations.
The chart indicates the gradual increase in payrolls from 2009 to early 2020 as the economy recovered from the Great Financial Crisis, followed by the sharp drop as the pandemic hit in April 2020, resulting in jobs falling from over 150m to 130m – a decrease of over 13%. The initial recovery was very quick though, with payrolls increasing to 141m in four months.
However, the worry for investors and economists of late has been the subsequent plateau since August, indicating a potentially slower recovery for the US economy. The last payroll release fell short of expectations, adding 49k jobs in January against 105k expected, whilst December’s job losses (the first in eight months) were revised up from 140k to 227k. The latest data shows the US is 10 million jobs short of the level reached before Covid hit.
Why this chart is relevant
This is data which policymakers have watched very closely and for many has emphasised the need for continued fiscal stimulus as President Biden forges ahead to push through a $1.9tn relief bill. Biden himself has cited the lower-than-expected nonfarm payroll increase as one reason to take swift and substantial action.
The Democratic win in Georgia last month that led to them taking the Senate helped provide enough votes in a budget resolution which could now see Biden’s plan pass through without Republican support.
The bill could see cheques up to $1400 sent to most Americans as millions remain out of work, nearly a year since the pandemic started to spread widely. With the nonfarm payroll data disappointing, focus will remain firmly on the politicians and policymakers responsible for implementing the stimulus measures.
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