On the December Jobs Report

December’s 140,000 payroll contraction is more than explained by losses of 498,000 in the leisure sector, dominated by 372,000 in the lockdown-sensitive food services and drinking places category. Since the recession trough in April, payroll gains and losses have been highly correlated to changes in social distancing – which in December logged its first increase since March. This is not a harbinger of a double-dip recession. It is not unusual to have payroll losses in a recovery, and this one far out-performs the post-2009 recovery in that regard. Other mid-frequency data such as PMI’s and high-frequency data such as holiday restaurant seatings are making new recovery highs. This will trigger calls for more “stimulus,” before the most recent round of checks even arrives in mailboxes. We think it’s not likely, and we know it’s not necessary. We’re already primed for a boom in 2021. $2000 checks for everybody would make it a bubble.