On the January Jobs Report

A miss versus consensus, made worse by downward revisions to prior months. Other contemporaneous labor market data looks better, but not by much. This sluggish payroll number will be used to promote “stimulus,” even as other less highly publicized data series show a very robust January. Payroll gains are highly correlated to relaxing lockdowns. Low-wage lockdown-sensitive sectors did the worst, while telework-capable sectors grew. Telework-capable workers can be permanently more productive. But 5.7% of the population cannot work due to coronavirus business closures. The only way to grow payrolls is to relax lockdowns, and there is no empirical evidence that they have had any public health benefit in the “dark winter.” Vaccine distribution is on-plan, and more are on the way. We continue to expect a V-shaped recovery complete by Q1, and a boom in the global economy in 2021.