If the payroll numbers are old news because they aren’t supposed to matter anymore, what with TGA drawdowns and vaccines, then JOLTS figures one month further behind them must count for even less. Gradation does factor here, though, and that’s why it’s important to keep the current and slightly-in-arrears data in mind.

What I mean is that the stimulus-frenzy narrative does begin by recognizing how “things are bad.” In fact, that’s the whole point behind the desire for Uncle Sam writing out and distributing even more, even larger checks. Yes, today is awful but…

Just how awful makes a difference; can make all the difference. There’s bad, really bad, and then there’s the end of 2020. It wasn’t quite as atrocious as March and April last year, a rebound in between which has clearly influenced perception given the direction seems to be upward (it is, after all, a rebound). From most mainstream perspectives, things are getting better if maybe not quite fast enough.

If that was the case, then, yes, Larry Summers and his overheating summation might apply. An economy near its potential requiring, in most Economists’ minds, a little surgical nudge instead handed the blunt instrument of $2 trillion (which is actually about $900 billion when you account for the accounting fictions politicians float) in gross fiscal negligence, they make the plausible case for it getting inflationary out of hand.

But that’s based on only where the economy was supposed to have finished last year, not where it actually did. It’s thought the non-economic shutdown lifted, reopening flooded the labor market with demand and supply equally, leaving just some fine-tuning along the way to minimize any unfortunate spillovers.

Reality, on the contrary, proved the reopening flood lasted barely two months before it was surrendered to what more and more looks like economic factors which have overwhelmed the easy, no-fuss non-economic rebound (the original “V” died a long time ago). The difference, then, isn’t an economy stumbling on its way back to potential, rather a system being held nowhere near it demanding more focused attention.

What’s most important, workers/consumers know this (see: labor force shrinking).



The labor market, in particular, was impacted by more COVID-excused interference when ending last year. The BLS reported an upward revised negative payroll estimate for December and barely positive for January. Those small-scale reverses aren’t the real problem; it’s the lack of momentum and unambiguous drive everywhere else which, all things equal, would’ve made up for the localized interruptions. That didn’t happen, a continuation of clear weakness that has extended into its seventh month.

The JOLTS estimates, though further behind, these provide more depth and corroboration to the description of the underlying economic condition. Like the other major employment figures, the data here shows a system struggling with a new baseline mean (summer slowdown) nowhere near the prior level of “potential.” Whatever the government and the Federal Reserve threw at the wall in 2020, it only got the labor market somewhere around halfway.

In a normal recession, this would qualify as the narrative sees it; an economy on its way. Following last year’s historic trough, huge, huge difference.

The reason, as JOLTS demonstrates, is the clear lack of demand for labor. A preponderance of non-economic factors wouldn’t, at this stage, add up to struggling demand; we should see huge, sustained demand for workers who maybe aren’t showing up to work because they’re being prevented by overanxious local governments.

According to Job Openings (JO), demand for more labor continues to be seriously suppressed. The seasonally-adjusted number of them has been stuck around 6.5 million since last July. That’s the entire second half of 2020 without acceleration even after one of the biggest labor market interruptions in American history.

Eager employers should be posting millions more online postings growing more desperate to source labor.

Instead, 6.5 million doesn’t even account for labor demand having weakened for nearly a year and a half straight before COVID was ever a thing.



Translating labor demand from advertisements to actual hiring, JOLTS Hires (HI) for December 2020 dropped by a considerable amount proportionally more than the sizable decline in payroll estimates. Apart from May and June, there hasn’t been another month of hiring turnover at rates above, let alone well above, recent (downturn) levels. Again, demand for labor continues to be low.

Additional BLS data provides insight into why that might be. Productivity estimates for Q4, blending BEA stats on GDP with BLS labor numbers, productivity typically skyrockets and remains elevated immediately following recession troughs – especially deep troughs.

The primary reason is mass layoffs; panicked by declining revenue, businesses naturally eliminate what they believe is excess costs, workers being the largest of them. Having pink-slipped a substantial number, productivity – that is, output per worker – begins to rise sharply as remaining workers meet the nascent recovery by becoming overburdened.

Output per hour soars from pared down payrolls leading firms to rehire bundles of workers, the self-fulfilling virtuous circle of recovery gets completed.

What if, however, you cut a ton of workers but productivity doesn’t come back nearly enough? This would signal that there really isn’t any need to bring busloads of formerly employed people back to the job; the reduced number of workers has more or less equalized to the lower levels of output.

That’s the last thing the economy wants, and it is inordinately difficult to get the virtuous circle restarted once this condition sets in (see: 2010 becoming 2011).




According to the BLS productivity estimates, as has been the case in most economic accounts there was a gigantic positive in Q3 but then a disappointing setback in Q4. As a result, productivity rose only to a level which used to have been normal and average decades ago; hardly the kind of thing consistent with typical recovery mechanics which would trigger a sustained employment recovery.

This one’s coming up well short of 2010 despite even more unemployment (and we knew there was trouble in the “recovery” from the Great “Recession” when productivity, on average, didn’t even rise to pre-crisis levels despite what had been up to then the greatest wave of mass layoffs since the Great Depression; since surpassed by 2020).

In other words, the economy doesn’t appear at all to be in sort of rough shape heading in the right direction only in need of another timely boost. It remains in seriously depressed condition despite already thirteen-digit “rescues” of the same kind proposed this year along the way last year. We weren’t supposed to end 2020 with still the biggest employment gap since the 1930’s.

We did and this does matter. Though they won’t admit it, this is actually the reason for the bigger checks in the first place. As always, those two things do go together: the higher the “stimulus”, the more trouble we must be in. That’s exactly what the data – all of it – shows.