On the March Jobs Report, and Being In Recession (Whatever that Means)
Friday, April 3, 2020
This is an utterly unique “shock” recession. If it is brief, the recovery will be strong and swift.
The biggest contraction in payrolls since March 2009, which was an economic and market bottom. Losses were heaviest in the leisure sector, which includes hospitality and lodging. Workers in this sector are the easiest to fire, and the easiest to re-hire. Their generally low wages can be easily replaced by the relief measures enacted last week. This is a recession now, but it is a highly unusual shock-driven one. It will be intense, but we think it will be brief. Its brevity, and the pre-emptive measures against systemic risk taken by the Fed, the Congress and authorities around the world, will likely preserve the stock of human, physical and financial capital necessary for a sharp recovery. That recovery will begin swiftly, as progress against Covid-2019 is becoming increasingly evident world-wide.