Employment Lags Recovery
There is a glaring bifurcation between the profits/GDP growth story and employment. GDP has recently hit a new all-time high, yet employment remains stuck well below its 2020 peak. The causes won't be known clearly for several more quarters, but some likely candidates are 1) generous unemployment insurance discouraging a return to work, 2) small businesses permanently closed, and 3) supply chain disruptions slowing business re-opening.
My own view is that this is temporary. Fiscal stimulus from Congress has given a powerful push to spending and economic growth. Extra unemployment benefits and a slow reopening of major states like California and New York are inhibiting the employment recovery. As we see rent forbearance, mortgage deferral and supplemental unemployment time out in the next few months, many workers should be out knocking on doors looking for work.
Robert Lloyds, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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