Let It Go, Let It Rip

A disappointing ADP payroll number, and a falling services PMI employment index, point to a miss versus the 875,000 payrolls expected for this Friday’s jobs report. That will put an end to taper talk for a while. The Social Distancing Index has stopped falling, far short of pre-pandemic levels of mobility. The supply side of the labor market has been held back by stimulus payments and topped-up unemployment benefits that paid low wage earners more not to work than to work. As unemployment top-ups have rolled off, the wave of Delta variant fear has probably held back the supply side instead. Draconian restrictions to prevent the spread of Delta would damage the demand side of the labor market, too, but we see little or no chance any will be imposed – nothing worse than low-impact palliatives like masking and vaccine mandates. Elite opinion has decisively turned. The dominant narrative is now “let it go” and “let it rip.”