Nobody seems to know what's going on with the economy 2021 ? The November job report is disappointing after recent gains

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Nobody seems to know what's going on with the economy
Nobody seems to know what's going on with the economy

Nobody seems to know what's going on with the economy

Analysis by Zachary B. Wolf, CNN

If you are confused about the US economy, which is showing both signs of strength and a cause for concern, you are not alone.

The economy is on the cusp of recovering from the coronavirus epidemic, caused by inflation or job creation frustration, depending on who you turn to.

It's probably all three, and what happens each month seems like a surprise. This element of uncertainty due to the onslaught of the epidemic is perhaps the most natural thing possible - the extraordinary government intervention to save the economy is unlike what no one living today has seen. .

Nobody seems to know what's going on with the economy

It is difficult to determine the importance of just one thing.

Gas prices could hit $5 per gallon!

Housing prices are up double digits!

Let's take a look at today's work.

Official data released Friday showed the US economy gained 210,000 jobs in November and the unemployment rate dropped to 4.2%. Low rates traditionally indicate full employment, which means that almost everyone wants a job.

And even!

Much of the November Jobs Report story described it as "disappointing" in the first sentence, but there was also evidence that the epidemic was advancing with the recovery.

Read here from CNN's Anneken Stages.

Why the frustration? Tapp wrote: Economists had expected more than double the number of jobs created in November, predicting a continuation of the booming economic recovery over the past two months. At least the opposite.

At the same time, there is good news. The employment report suggests that the resumption of the epidemic is progressing. The country created over 6 million jobs this year and the participation rate reached 61.8%, the highest level since the outbreak began.

Much of the frustration comes from the expectations. The employment report is based on two surveys - one of salaried businesses and one of households on their economic status - which are conducted by the government in the middle of the month and the first is released by the Bureau of Labor Statistics. Every Friday of the month.

Jason Furman, head of the Economic Advisory Council under the Obama administration, tweeted: "A strange number of jobs."

"Very good survey of families: unemployment fell to 4.2% and labor market participation increased, while employment rose to 1.1 million," he tweeted. "But generally more reliable salary surveys show that only 210,000 jobs have been added."

I don't know what happened: “There may be an explanation, but it may just be a measurement error. "

Where do expectations come from?
Leading up to the monthly release, economists and banks publish their own expectations for what the surveys will find. If the government data doesn't hit those expectations, disappointment follows.

I talked to Alice Gold, a senior economist at the Institute for Economic Policy, about what we can and cannot learn from this report.

You said they should be seen as information, not a complete picture, in part because surveys can overstate things and ignore the varying structure of the workforce.

Revisions to the employment report in recent months have confirmed stronger employment growth than the survey showed.

However, it's best to know the latest information, even if we know it's a matter of change, she said.

Also, the pandemic. There is also the pandemic element to confound economic expectations, just like it has confounded people's lives.

"Everyone in today's economy and those who are making these predictions have never experienced an epidemic that has hit the job market so hard," Gold said. "And so their models aren't necessarily capturing the ups and downs of the epidemic."

I asked David Goldman, editor-in-chief of CNN Business, for his thoughts on why these reports seem to confuse expectations each month. He returned with three points:

  • This is a particularly unusual environment.
This makes it really difficult for economists to predict. Labor shortages, supply chain crises, energy crises, inflation and the Covid-19 situation have all come together to maintain a fine balance. We economists should take a break.

  • Right in the long run. 

Economists have actually proven themselves right in recent months, when they were initially thought to be wrong. As labor economists obtain more information, reports are likely to be revised upward in the coming months. It's not hard for Goldman Sachs and JPMorgan economists to understand, it's hard for the government.

  • Don't focus on expectations. 

Forecasts are not the important thing here, they are actual information. And not a month trend. We've had surprisingly good job data over the last few months and November wasn't too bad, just not as good as we expected.


Elsewhere there is uncertainty. Federal Reserve leaders, such as President Jerome Powell, have preached that inflation is temporary, calling it "temporary" in the sense that it will not affect the economy permanently.

But in a signal that inflation could last a little longer than expected, Powell told lawmakers this week that the Fed could end some of its epidemic stimulus efforts - they call it "tapping" - before planning.

"The economy is very strong at the moment and inflationary pressures are high and so it is appropriate, in my view, to consider stopping the decline in our asset purchases ... maybe a few months ago," Powell said.

A wrench thrown into the economy has had the resilience of the coronavirus. We do not understand how the rise of the Delta variant has delayed progress in the summer and autumn.

Tappe and CNN's Nathaniel Myerson wrote about the Delta effect in August.

Now that the Omicron variant is emerging, it could also take things in a new direction.