May sees biggest jobs increase ever | Hacker News Reader

May sees biggest jobs increase ever

cnbc.com

39 pointsdrocer8824 comments

Missing from the article, as always, is an analysis of what those jobs are. Are they comparable to the jobs that existed before? Are they lower-paying or higher-paying? What kinds of employers are opening up new jobs? What sectors? How many hours a week? How many unique employers are adding jobs? Are they new companies or existing companies? Etc.

Obviously not all of this data is available or even obtainable. But that one number by itself -- total nonfarm payroll -- is an extremely coarse measurement of the state of the economy, and we need to stop acting like all jobs are created equal. This is precisely what gave us the "false recovery" of the early 2010s. Politicians looked at headline unemployment and said "great, recession over!" meanwhile people were looking at their wallets and wondering when exactly the recession ended.

Edit: As a result of this politician-public misalignment, policy was made assuming that things were "back to normal", allowing the practical effects of the recession to linger for years longer than they needed to. Arguably this is what sowed the seeds for the 2016 election of Donald Trump and the rise of anti-intellectualism across the USA.

CNBC has some analysis on what jobs were created at : https://www.cnbc.com/2020/06/05/record-job-gains-heres-where...

Looks like vast majority were in hospitality. Unfortunately, the warning sign is ~-500K in government sector. One of the major things that drew out the last recession was a significant decline in jobs for government employees month to month as tax revenue dried up.

While at this point any good news is welcome. The fact we are seeing an increase in hospitality, which typically are hourly with little/no benefits, for government jobs, which typically are more professional with good benefits, should be worrying. My non-expert analysis thinks it means the COVID-19 recession is becoming more systemic.

I'm fascinated by how many people are upset about this good news. I wonder what their motivation could be.

It's confirmed by a big surprise in positive jobs in Canada for May as well:

https://www.reuters.com/article/us-canada-economy-instantvie...

Name one

Most of this thread:

https://news.ycombinator.com/item?id=23428326

HN has been posting and upvoting dreadful reports on job losses and economic destruction for weeks. Now there is a massive positive event and HN is disinterested and cynical about it, maybe even outright hostile (look at the vote vs comment ratio, a tell).

Obviously some prefer a lockdown forever strategy.

I think this is pretty good evidence that we're likely to see a rapid V-shaped recovery. The recession will be be deep, but it's unlikely to be prolonged. There's no fundamental reason we can't simply roll back the clock to Q4 2019.

Most business cycles are different, because they involve the accumulation of mal-investment during the exuberance of the late-stage expansionary phase. During the boom people make a lot of bad decisions. In 2007 people were allocating way too much capital to housing and the banking sector. In 1999 they were investing in Pets.com and Enron. In 1980, existing business models could not handle the rise of rates from 8% to 16%.

In many ways the hardest part about recovering from a recession is for the economy to figure out how to climb back to its pre-recession GDP highs, without falling into the same pitfalls from before. That necessarily involves a period of learning and trial, which makes it a long process.

However this recession is very different. It wasn't caused by speculation or malinvestment in the expansionary phase. It was caused by a totally exogenous shock to the economy. Once you remove that shock, there's no reason that GDP shouldn't snap back to its previous peaks.

But we are 10 years into a bull cycle. Shouldn't we see a recession soon regardless of COVID?

If you have the Fed artificially buffering the expansion & recession forces (as we have, with their zero rates forever, QE infinite), you could see a slow overall rate of growth stretched out over a long period of time instead of a sharp & brief recessionary contraction and sharp bounce back as typical in the past. Their never-ending stimulus may smooth out that expected event. In that scenario, the only thing likely to cause a meaningful recession is an (perhaps inevitable) epic asset bubble popping, from some very high price point that gets so high in a parabolic run that it's unsustainable even if pumped by 0% Fed rates (think Bitcoin crashing down from the rapid run toward $20k or the last quarters of the dotcom bubble run).

It took me a long time to swallow this pill but these things are arbitrary when they are up against certain levels of intervention. Gravity is real and this bubble will crash and it will be catastrophic but they could inflate and reinflate this bubble for decades if the macro environment cooperates. You really can't time or predict this stuff.

There's not really any evidence that bull markets die of old age.[1] For example prior to 2020, Australia had 29 years of robust economic growth without a recession.[2]

[1] https://www.cnbc.com/2018/03/07/bull-runs-dont-die-of-age--t... [2] https://edition.cnn.com/2020/06/03/economy/australia-recessi...

There's no fundamental reason we can't simply roll back the clock to Q4 2019.

Well, other than the global pandemic that is still extant and killing nearly 1000 people a day in the US. And all of the bankruptcies and small business closings.

I think we're still whistling in the graveyard here. People aren't good at thinking about systems with feedback lags, and we are in uncharted territory with a massive global economic system that has lots of feedback loops in it.

A massive number of small businesses are likely to never reopen,the corporate paper market is in total disarray even with massive intervention, unemployment is still way up, and the virus isn't over.

All this after we shot our bazooka monetarily: fed funds are hovering at 0, the fed balance sheet has increased something like 300-400% I believe and the M2 graph looks like an upward cliff. Meaning if there is another big dip we have much harder decisions to face.

We are not by a long shot where we were in February. Invest on that thesis at your own risk.

Equity markets don't reflect your viewpoint. There's a reason the S&P is now less than 10% below its previous highs.

Regarding monetary stimulus being exhausted, the Fed Chairman specifically says that's not true[1]. Even at the zero bound for short-term rate the Fed can push overnight rates negative, or purchase long-dated bonds, corporate bonds, municipals, or even equities.

The only fundamental limit on monetary stimulus is inflation or a balance-of-payments crisis. Inflation expectations are significantly lower than before the stimulus. And rather than a devaluation of the dollar, there's a global shortage of dollars. The reality is the Fed can print far more money before running into constraints related to inflation or currency devaluation.

[1] https://finance.yahoo.com/news/jerome-powell-federal-reserve...

Sure, throw your money in near all time highs with all this going on. Good luck with that.

To be fair, I went long when S&P was around 2500.

My reasoning was/is that if you run a DCF on large-cap US equities, then only about 10-15% of the NPV is derived from the next eight quarters. So even if corporate profits go to zero until 2022, the underlying assets are still valuable in a post-pandemic world.

For example in 2007, we were paying $500 billion for Citigroup, and it turned out that it just wasn't worth anywhere near that. It's still 90% off its 2007 high. My sense is that even if Disney World is shut down today, in 2022 it will still be worth what Disney World was in 2019. Besides maybe Boeing, I don't see any equivalent to Citigroup or Enron in today's market.

Your comment is typical of the wishful thinking that is going on right now. You didn't mention the virus once.

The inescapable calculus is that the more people go back to normal, improving the economy, the more likely it is for the virus to spread and the more likely people will withdraw from normal activity due to fear or official action.

The virus hasn't been defeated. It was only suppressed because of a harsh lockdown, and it's still circulating and will still kill people.

There may be a delay before cases ramp back up or it may stay suppressed until the fall or winter, but the situation has not fundamentally changed.

Most states have ended lockdown down. Some for more than a month. Covid deaths in the US are still declining. The difference between now and March is that we have a much better understanding about the nature of super-spreading events.[1]

We know that a very high amount of spreading comes from a disproportionately small amount of activities. Like choir practice, unventilated subways, and nursing homes. The upshot is that any future lockdown will be much more tailored and have a much smaller impact than the full-scale shutdown we saw in April.

[1] https://www.businessinsider.com/super-spreader-events-accoun...

Seems to good to be true, and in the FAQ starting page 9 there is some interesting info:

In May 2020, 5.4 million people were included in the “other reasons” category—about two-thirds of the total 8.4 million employed people not at work during the survey reference week (not seasonally adjusted). This is lower than the 8.1 million people not at work for “other reasons” in April, but was substantially higher than the average of 549,000 for May in recent years. As in April, BLS analysis of the underlying data suggests that this group included workers affected by the pandemic response who should have been classified as unemployed on temporary layoff. Such a misclassification is an example of nonsampling error and can occur when respondents misunderstand questions or interviewers record answers incorrectly. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are making changes for the June collection.

And

13. Household survey: What would the unemployment rate be if these misclassified workers were included among the unemployed? If the workers who were recorded as employed but not at work for the entire survey reference week had been classified as “unemployed on temporary layoff,” the overall unemployment rate would have been higher than reported. This kind of exercise requires some assumptions. For example, first one needs to determine how many workers might be misclassified. There were 5.4 million workers with a job but not at work who were included in the “other reasons” category in May 2020, about 4.9 million higher than the average for May 2016–2019. (While this category contains misclassified workers, not every person in this category was necessarily misclassified. The average for recent May estimates was 549,000 employed people with a job not at work for “other reasons.”)

One assumption might be that these additional 4.9 million workers who were included in the “other reasons” category should have been classified as unemployed on temporary layoff. If these workers were instead considered unemployed on temporary layoff, the number of unemployed people in May (on a not seasonally adjusted basis) would increase by 4.9 million from 20.5 million to 25.4 million. The number of people in the labor force would remain at 158.0 million in May (not seasonally adjusted) as people move from employed to unemployed but stay in the labor force. The resulting unemployment rate for May would be 16.1 percent (not seasonally adjusted), compared with the official estimate of 13.0 percent (not seasonally adjusted). Estimates of people with a job but not at work are not available on a seasonally adjusted basis, so seasonally adjusted data, such as the unemployment rate mentioned in The Employment Situation news release, are not used in this exercise. (Repeating this exercise, but combining the not seasonally adjusted data on additional people with a job but not at work in the “other reasons” category with the seasonally adjusted estimates reported in The Employment Situation news release yields a similar 3.1 percentage point increase in the unemployment rate for May—or 16.4 percent, compared with the official seasonally adjusted rate of 13.3 percent.)

https://www.bls.gov/cps/employment-situation-covid19-faq-may...

> Seems to good to be true

It's not too good to be true. Canada had an unexpected, very positive report, they're 1/9th the size of the US and the economies are very tightly linked; their data indicated 289,000 job gains. Can you explain that, is Canada faking their numbers dramatically?

"Canada added a net 289,600 jobs in May, with most of the employment gains coming in full time, Statistics Canada said on Friday. The rebound in May hiring comes after Canada lost a record-breaking 2 million jobs in April."

Who said the numbers are faked, whats your explanation of what I posted? We are talking 10 times the amount of the same time last year.

Perhaps Canada has the same issue in "workers with a job but not at work" being misclassified?

Not surprising, most of the layoffs were probably temporary. Restaurant staff for example will be quickly re-hired as things open back up, and hourly wage earners make up the bulk of people who were laid off.

I wonder if this number includes employees who were "furloughed" but not actually let go, whose furloughs have ended.

I'm curious as well. I'm not entirely sure what the difference is from a legal perspective, it would be interesting to hear from someone who knows.

sad how many people want this number to be wrong and want suffering because they hate the president so much.

this should be the top post on the site right now

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