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Biden Comments on the Jobs Report and Gets the Key Message Wrong

In response to today's jobs report Biden wants still more free money.
Author:
Janet Yellen!

American Rescue Plan - More Free Money

“Some critics said we didn’t need the American Rescue Plan, that this economy would just heal itself. Today’s report just underscores, in my view, how vital the actions we are taking are."

"Today's report also puts some truth to loose talk that we've been hearing about the economy lately. 

"First, that we should stop helping workers and families out for fear of overheating the economy. Today's report make it clear. Thank goodness we passed the American Recue Plan."

"Second, today's is rebuttal to loose talk that Americans just don't want to work. What this report shows is there is a much bigger problem, not withstanding the commentary you might have heard this morning, is that our economy still has 8 million fewer jobs than when this pandemic started. More workers are looking for jobs and many can't find them." 

The preceding paragraph starts at the 5:26 mark.

Facts 

  • The economy has 8.2 million fewer jobs than when the pandemic first hit. Biden made a correct statement.
  • There are 9.8 million unemployed according to the BLS.
  • There were 7.4 million openings at the end of February according to the BLS JOLT report, undoubtedly much higher today. 

The Word of the Day is "Shortage"

Shortage of Applicants

Yesterday I commented The Word of the Day is "Shortage": Why Can't Employers Find Workers?

Why Can't Employers Find Workers?

  1. Enhanced Unemployment Benefits
  2. Lack of Child Care
  3. Fear of Getting Covid

The WSJ came up with those answers but listed them in reverse.

Why Work?

Reason number 1 is key. When you pay people more to be unemployed than they make employed you see charts like the lead chart.

Fear of getting Covid is a copout for "I'd rather collect unemployment."

On top of unemployment insurance, we had three rounds of Covid stimulus, fired in shotgun fashion. 

Millions Are Hurting

Without a doubt millions of people still are hurting. Indeed, I am quite certain the official unemployment rate is way too low. 

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I will crunch what I believe to be the real numbers later.

Millions Gaming the System

We need to look at the other side of the coin as well. There are also millions of people gaming the system.

When you get paid more in unemployment insurance than you make as a worker, there is an enormous incentive to not work.

Help Wanted, No Takers

I see help wanted signs all over the place. 

There was a sign on a Domino's Pizza near me that said "closing early because we cannot get workers".  

I could not get a pizza last Friday evening at 8:30PM. I went in person because they would not answer the phone.

I hear the same thing from waiters. 

Most complain about being exhausted but many of them are happy about working long shifts and getting more tips. 

Shotgun Approach

Helicopter Drop

That image accurately describes the state of affairs. 

Three rounds of stimulus went out in helicopter drop fashion and not just to the unemployed.

Speculation

In addition to being a moral jobs hazard and a huge disincentive to find work, the shotgun blast of money reinforced speculation in those who do have a job.

The Epitome of Greater Fool Mania is Dogecoin, Created as a Spoof on Bitcoin, now worth $70 billion.  

The Fed and Congress with cheap money and free money respectively have unleashed speculation the likes of which we have not seen before. 

Speculation now exceeds that of the Housing bubble and the DotCom bubble.

Inflation?

You bet, while the bubbles are still expanding. Then what?

For discussion, please see Add David Rosenberg to List of Those Who Believe Inflation is Transitory

Mish

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