The Biden boom is in full swing and people like what they see.
Investors and business owners around the world are largely optimistic that the Biden administration’s economic policies will fuel a robust recovery and leave them on better footing, according to a recent UBS survey. Some 64% of respondents view the administration as having a positive impact on the global economy. Six in 10 believe the White House’s policies will support global markets.
Roughly 57% of investors and business owners said the Biden administration has benefitted their personal finances, and 54% of business owners said the policies benefitted their companies.
In just the first 100 days of his time in office, President Joe Biden has embarked on one of the most ambitious policy strategies in modern history. The president passed a $1.9 trillion stimulus measure – the second-largest in history – on March 11 and has since unveiled follow-up packages that include roughly $4.1 trillion in additional spending. Economists have largely linked soaring retail sales and stronger economic growth to the stimulus measure.
To be sure, President Joe Biden’s policies aren’t the only cause for optimism. New COVID-19 cases in the US sit at their lowest seven-day average since October, and state and local governments have been slowly rolling back lockdown measures for weeks. And while the vaccination rate has slowed, it still sits at an average 2.5 million doses per day. At the current rate, the US will reach herd immunity over the next three months, according to Bloomberg data.
In the US specifically, seven in 10 investors expressed hope about the path of the economy. That compares to just 52% three months ago and makes US investors the most positive globally, UBS said.
The share of US investors growing positive toward stocks rose to 71% from 59%. The shift underscores a broader move toward riskier assets as investors ditch the safe havens they held at the start of the pandemic and position for a swift recovery.
The responses join other sentiment gauges that have turned stronger in recent months. The University of Michigan’s consumer sentiment index rose to a fresh pandemic-era high in April, according to a Friday release. That level is the highest since March 2020. Separately, the Conference Board’s consumer confidence measure rose to its highest level since February 2020 as the healing labor market and latest round of stimulus checks boosted outlooks.
UBS interviewed 2,850 investors and 1,150 business owners around the world from March 30 to April 18. Responses were sourced from 14 markets including the US, the UK, Mexico, mainland China, Japan, Italy, Brazil, and Mexico.
Americans have built up excess savings worth $2.6 trillion since the start of the coronavirus pandemic that will help power the economy’s recovery from the crisis, according to Moody’s Analytics.
The US has amassed the most excess savings of any country, with the cash pile amounting to 12% of gross domestic product.
Around the world, people have built up extra savings worth $5.4 trillion, equal to around 6.5% of GDP. Savings have shot up as opportunities for spending have been limited by lockdowns but central banks and governments have pumped money into economies to support employment.
“An unleashing of significant pent-up demand and overflowing excess saving will drive a surge in consumer spending across the globe as countries approach herd immunity and open up,” said Mark Zandi, chief economist at Moody’s Analytics, a sister company of the credit ratings agency, in a note.
Zandi said Moody’s expects 20% of the US excess savings to be spent in 2021, adding 2.4 percentage points to real GDP growth in 2021. The analysis company expects the US economy to grow 6.4% in 2021 after shrinking 3.5% in 2020.
A further 20% will then be spent in 2022, Moody’s predicted, adding another 2.4 percentage points to annual growth, which is set to come in at 5.3%.
However, Zandi said the unequal nature of the savings built up in the US would limit an even bigger boom in spending.
“Much of the excess saving has been by high-income, high-net-worth households who are likely to treat the saving more like wealth than income, and will thus spend much of less it, at least quickly,” he said.
Moody’s data showed that nearly two-thirds of the excess savings in the US is by households in the top 10% of the income distribution, and three-quarters is by those in the richest 20%.
Excess savings are defined as extra savings on top of what households would have put aside had coronavirus not occurred and their behaviour been the same as in 2019.
“The US consumer is generally not known for its reserve and thriftiness at the best of times,” she said.
Ward said she thought it was likely that inflation averaged 3% over the next decade. Core personal consumption expenditure inflation, the Federal Reserve’s preferred measure, stood at an annualized 1.4% in February.
Warmer weather, reopening, and stimulus support converged in March to drive the strongest month of retail spending the US has ever seen.
Retail sales increased 9.8% last month to a record $619.1 billion, according to Census Bureau data published Thursday. The leap nearly doubles the median economist estimate of a 5.8% gain from economists surveyed by Bloomberg. February’s decline was revised higher to a 2.7% contraction.
The March reading sits 27.7% higher than that seen exactly one year ago. Sales dipped in March 2020 and hit their pandemic-era floor in April as initial lockdowns and fears of COVID-19 kept Americans from spending at physical stores.
Retail sales have been a key indicator for economic activity and became even more relevant amid the virus-induced restrictions. Such spending counts for roughly 70% of economic activity, and the rebound seen after the winter virus wave suggests the country can soon return to pre-pandemic strength.
Stimulus boost, redux
Last month’s upswing mirror that seen at the start of the year. Retail sales shot 7.6% higher in January as Americans deployed direct payments included in President Donald Trump’s $900 billion stimulus package. The climb snapped a three-month streak of declines and handily beat economist forecasts.
It appears the $1.9 trillion stimulus measure approved by President Joe Biden in March achieved a similar effect.
“With fresh stimulus checks in hand, consumers took advantage of warmer weather and increased vaccinations to splurge at car dealerships, shopping malls, restaurants, and home improvement stores,” Gregory Daco, chief US economist at Oxford Economics, said, adding the March reading only marks the beginning of the “consumer boom.”
Oxford Economics expects private spending to grow 8.4% through 2021 on the back of widespread vaccination and reopening. That would be the fastest growth rate since 1946.
Early data suggests Americans didn’t even use the full payments to drive the March increase. Stimulus check recipients only spent about 25% of the payments, according to researchers at the Federal Reserve Bank of New York. That’s less than the share spent from the previous two rounds of stimulus checks. Conversely, larger portions were diverted to savings.
The data is clear: The economy is recovering
The retail sales report caps a month that’s likely to mark a turnaround for the US economy. For the first time since the pandemic began, practically every economic release pointed to a broad and fast-paced recovery.
Consumer sentiment leaped to one-year highs as the vaccination rate improved and nicer weather allowed for a return to some pre-pandemic activities. Jobless claims tumbled to pandemic-era lows, and fell further still last week. The manufacturing sector continued to grow at a healthy pace, and the service businesses saw activity rebound after struggling through the winter.
Perhaps the most notable report came on April 2 from the Bureau of Labor Statistics. The agency reported a 916,000-payroll gain in March, beating estimates and marking the strongest month of job growth since August. Readings for January and February were both revised higher, and the headline unemployment rate fell to 6% from 6.2%.
To be sure, there’s still plenty of progress to make before the country is fully in the clear. The government’s monthly jobs report showed the economy is still down some 8.4 million payrolls from before the health crisis. Unofficial estimates that include misclassification and workers who dropped out of the labor force since February 2020 place that sum closer to 14 million. And while jobless claims continue to decline, they still sit at levels twice as high as those seen before the pandemic.
The Thursday spending data is an encouraging sign. Increased spending lifts businesses’ demand for workers and, in turn, accelerates hiring. The pace of vaccination continues to improve, and state and local governments are slowly relaxing their lockdown measures.
Coronavirus strains still present some risks, but the economy seems to be at an “inflection point,” Federal Reserve Chair Jerome Powell said Wednesday. Americans should keep socially distancing and masking up to ensure the country can effectively curb the virus’s spread, he added.
The positive March jobs report showed a country on the brink of full reopening, with good news for the economy around the corner. But just reopening isn’t enough for a full recovery.
“There’s no guarantee that the people whose jobs have been permanently eliminated will be able to find work elsewhere,” Nancy Vanden Houten, lead economist at Oxford Economics, told Insider. “At the same time, there’s a risk that labor force participation won’t return to what it was prior to the pandemic. We might still experience shortages of workers.”
Filling the hole in the labor market will take more than reaching a 3.5% unemployment rate and recouping every lost payroll, she said. The country was adding roughly 200,000 jobs a month before the pandemic, meaning the labor market will have to get back to the February 2020 level – and then some – to reach maximum employment.
The US began that climb in earnest last month, adding 916,000 nonfarm payrolls, blowing the median estimate of a 660,000 gain out of the water. The unemployment rate fell to 6% from 6.2%, matching economist forecasts, still far above the 3.5% pre-pandemic rate.
Experts are bracing for several months of outsize job gains as consumers thaw the frozen economy. But to Vanden Houten’s point, pressures are now emerging on the supply side. While consumer demand shows signs of coming back, other signs point to an imbalance between job openings and Americans actively seeking work.
Jobless claims, however, have been volatile in recent months and give a clearer hint at deep scarring. Filings fell to a pandemic-era low of 658,000 in March but rose to 744,000 last week, signaling persistent challenges in hiring.
Supply strains and lagging cities present new challenges
Some of the world’s top economic policymakers are warning of long-term scarring of the labor force that reopening can’t address. Countries will need to “think well in advance” of what a post-pandemic economy will look like so as to add jobs where they’re going to be, Kristalina Georgieva, managing director of the International Monetary Fund, said in a Thursday video conference.
Federal Reserve Chair Jerome Powell echoed her remarks, noting that millions of Americans will struggle to find work as they acclimate to a permanently changed labor market.
“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” he said in the conference. “It’s important to remember we are not going back to the same economy, this will be a different economy.”
Even the businesses set to benefit most from reopening are running into snags. Staffing at full-service restaurants remains down 20%, or 1.1 million openings, from the year-ago level, according to data from the National Restaurant Association. Owners and managers interviewed by The New York Times attributed the persistent shortfall to a lack of available workers. Others said their former employees chose to stay out of the workforce and subsist on expanded unemployment benefits.
The country’s most densely populated areas are also experiencing slow recoveries, government data shows. Los Angeles and New York City held the highest February unemployment rates of the 51 major metropolitan areas: 9.9% and 9.8%, respectively. This kind of high unemployment in densely populated cities is bad news for the economic recovery, as the longer that the engines of the pre-2020 economy lie dormant, the further away lies a return to a kind of “normal,” unless a new normal rapidly takes its place.
The stimulus spending boost could be smaller than expected
The government acknowledged risks associated with weak spending and acted on them. The $1.9 trillion stimulus measure approved by President Joe Biden in March was the largest relief package to hit the US economy since the CARES Act was passed in the first months of the pandemic. Americans received support in the form of stimulus checks and bolstered unemployment benefits, two boosts set to supercharge spending and overall demand as the economy reopened.
Recent studies suggest that boost may not be be as potent as anticipated. Stimulus check recipients spent just under one-quarter of their latest relief payments, according to researchers at the Federal Reserve Bank of New York. That’s less than the share spent from the CARES Act checks or the $600 payments issued in January.
About 42% of the payments were saved, the highest percentage of all three stimulus checks. Though those savings can be unwound over time, they do little to aid the recovery in the near term. The remainder of the checks is expected to go toward paying down debts.
“As the economy reopens and fear and uncertainty recede, the high levels of saving should facilitate more spending in the future. However, a great deal of uncertainty and discussion exists about the pace of this spending increase and the extent of pent-up demand,” the team led by Oliver Armantier said.
Stimulus passed throughout 2020 already buttressed Americans’ savings, and there’s been little sign of that cash being put to use. Peoples’ savings grew by $1.6 trillion since last March, according to the New York Fed, but that sum is largely staying in bank accounts instead of moving throughout the economy.
Americans who held onto their jobs haven’t increased their spending activity even though their savings increased, the Fed researchers said in a Monday blog post. Limitations to how much people can dine out or go on vacation will also curb a surge in consumer spending.
“It is certainly possible that some of these savings will pay for extra travel and entertainment once the COVID-19 nightmare is behind us, but our conclusion is that the resulting boost to expenditures will be limited,” the team said.
Outlooks remain strong. Banks are forecasting the strongest economic growth in decades, and the March payrolls report bodes well for near-term job gains. The president’s $2.3 trillion infrastructure plan promises to create millions of new jobs if it can win ample bipartisan support.
But the path to a fully healed labor market remains riddled with downside risks. Trends in worker availability, consumer spending, and permanent scarring will determine whether the country can stage one of the fastest economic recoveries in history.
President Barack Obama and President Joe Biden faced similar circumstances in their first months in office. Both entered the White House in the midst of crippling economic downturns. Both immediately pursued emergency stimulus plans to put the country on track for a recovery. And both spent unprecedented amounts to do so.
But Biden is going bigger, and it could be a very big deal for the future of economic policy.
Biden came out swinging with his $1.9 trillion stimulus package, passed less than two months into his presidency. Beyond its size, scope, and speed, the plan signaled a major deviation from Obama-era logic on spending and working across party lines. The result was a wide-reaching package passed through reconciliation, one that picked up zero Republican votes in both the House and the Senate.
It showed that Biden doesn’t plan to govern like Obama, where the aim was as much bipartisanship as possible and a mindfulness of the size of the federal debt. Biden’s big spending has already evoked comparisons to FDR and LBJ – two presidents Axios reported Biden is very interested in these days – and he may just be getting started. The big question is what comes next.
“The recovery from the Great Recession was long and painful. It exacerbated inequality and other forms of economic scarring,” Claudia Sahm, a former economist at the Federal Reserve, told Insider. “Those experiences are fresh in the minds of policymakers and the public.”
Neither Obama’s office nor the White House responded to requests for comment.
Recover first, pay the bill later
Congress’ recession-recovery playbook has traditionally been fairly simple: offer support where needed, then pull back on aid and turn to austerity once the rebound is on track. Past downturns have seen calls for fiscal support quickly give way to deficit concerns among Republicans and Democrats.
But the record of recoveries from past downturns is informing Biden’s approach. The Federal Reserve’s decision to dampen inflation and start lifting interest rates in 2015 sparked years of weak growth and low inflation. Many economists have since looked back at the rate hikes and the Obama administration’s stimulus package as allowing for a plodding economic rebound.
The very nature of the current slump changed the thinking around fiscal stimulus and paved the way for a new era of government support, said Jason Furman, professor of economics at Harvard University and chair of Obama’s Council of Economic Advisors.
“When there is a big disaster like Katrina or the Gulf oil spill or superstorm Sandy, we’ll spend $100 billion. This was like one of those disasters, but happening everywhere at the same time,” Furman said. “People don’t completely believe in fiscal stimulus. They do believe in disaster relief.”
Congressional Democrats and Federal Reserve officials have been lining up alongside Biden. The rush to austerity in 2009 was a “big mistake” that left the country in recession for five years, Senate Majority Leader Chuck Schumer said in a March interview on CNN.
More recently, Federal Reserve Chair Jerome Powell told NPR that the economic recovery still takes priority over the national debt. While the country’s spending path is currently unsustainable, low rates ensure it can pay off its debt until the economic activity fully rebounds.
The government will eventually have to put the federal debt on a sustainable path, “but that time is not now,” the Fed chair added.
The central bank is still projecting its first rate hike won’t arrive until after 2023, and officials have hinted they aren’t even considering pulling back on the Fed’s emergency asset purchases. Rising Treasury yields suggest investors have different expectations, but policymakers have so far been steadfast in their patience.
“If my 2010 self could see just how different we’re handling this recovery than we handled that one – when we were just pulling our hair out, because Congress was turning towards austerity when the unemployment rate was literally over 9% – it was just an outrageous approach to the recovery at that time,” Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute and former chief economist to Obama’s secretary of Labor, told Insider. “And so this is just incredibly different.”
A lack of state and local spending hindered Obama’s recovery, but Biden is pouring in billions
Economists began to sound the alarm before the second stimulus, emphasizing the urgent need for state and local funding. As Insider’s Ben Winck and Joseph Zeballos-Roig reported at the time, the CARES Act’s $150 billion for local governments ran out on December 30 – and the lack of similar funds in the Great Recession likely slowed the subsequent recovery. That funding was also scrapped in former President Donald Trump’s second stimulus package; as CNN reported.
When it comes to his legacy, Biden is reportedly excited about what’s forming. Axios reported that he recently met with presidential historians to discuss the size and speed of potentially huge changes, with comparisons abounding to Presidents Franklin Delano Roosevelt and Lyndon Baines Johnson, who both spearheaded huge expansions of the social safety net.
“The historians’ views were very much in sync with his own: It is time to go even bigger and faster than anyone expected. If that means chucking the filibuster and bipartisanship, so be it,” Axios’ Mike Allen and Jim VandeHei wrote. In fact, they report, Biden loves the narrative that he’s thinking bigger and bolder than Obama.
He’s even gotten praise from another longtime politician and Senate veteran: Progressive figurehead Bernie Sanders. In an interview with The New York Times’ Ezra Klein, Sanders praised Biden for moving past his more “moderate” past and “acting boldly” with the American Rescue Plan.
Leonard Burman, the Paul Volcker Chair of Behavioral Economics at Syracuse University’s Maxwell School, told Insider that the Great Depression actually lasted as long as it did because Roosevelt and other leaders feared deficits too much.
FDR actually spent less than would have been “appropriate,” Burman said, and recovery really only came with the influx of spending that accompanied World War Two.
“People think of the New Deal as this really, really aggressive response to the Great Depression,” said Burman, who is also cofounder of the Urban Institute’s Tax Policy Center, and he said it limited pain by creating jobs for some people that needed them and providing other assistance, “but it was way too small. So we literally have now – as far as I know – we’ve never done this.”
“We have lots of experience with spending too little to try to get out of a recession. We don’t have any experience with spending too much,” Burman said. “So it’ll be interesting to see what happens.”
The Fed is behind the push for stronger-than-usual price growth. The central bank updated its policy framework in August to target inflation that averages 2% over time, as opposed to the prior goal of simply pursuing 2% inflation.
Officials have since confirmed that, at least for a period after the pandemic, the Fed aims to let inflation trend above 2% to counter years of weak price growth, underscoring just how different the approach is this time around.
The Obama administration “had a hard time” getting some Democratic senators to lift the debt limit and spend roughly $831 billion on the American Recovery and Reinvestment Act, Furman told Insider.
The Biden administration, on the other hand, has had a far easier time uniting Democrats around trillions of dollars worth of relief spending.
“The inflation debate is largely taking place among economists. It’s not a concern that I’ve heard very much from members of Congress,” Furman said. “Biden benefits from people having much more tolerance for larger numbers than they used to.”
Biden and the Fed both want an equitable labor market
Going hand in hand with the Fed’s new inflation target is a goal to pursue “maximum” employment instead of its previous mandate of “full” employment. The updated strategy leans more on using a range of indicators to judge the labor market’s health than focusing on the headline unemployment rate.
Though the central bank acts independently of the White House, the new framework opens the door to economic policy that more aggressively targets a tighter and more equitable labor market.
“There was a time when there was a tight connection between unemployment and inflation. That time is long gone,” Fed Chair Powell said during a March 17 press conference. “We had low unemployment in 2018 and 2019 and the beginning of ’20 without having troubling inflation at all.”
Job gains seen at the end of the last economic expansion largely benefited racial minorities and lower-income Americans, two groups that underperformed the broader unemployment rate for years. Biden’s latest stimulus plan stands to lift demand and pull forward such gains. The millions of jobs still lost to the pandemic indicate there’s plenty of slack in the economy and, therefore, reason to supercharge growth with fiscal support, UBS economists said in a March 9 note.
That slack also supports calls for additional large-scale spending packages. The $3 trillion in new spending is still not enough to get the US economy to the finish line, Sahm told Insider.
“Both the 2001 and 2008 recession were jobless recoveries, in that GDP got back on track much sooner than employment,” she said. “A year into the pandemic, we are still missing 9.5 million jobs relative to pre-pandemic. We cannot afford to have another jobless recovery.”
It’s becoming clear just two months into his presidency that Biden has an endgame in sight: lots of government spending to create a more equitable economy.
The Dow Jones industrial average led US stock higher Friday as optimism around the economic recovery was boosted on the back of an accelerated pace of COVID-19 vaccinations. The Dow closed higher by over 450 points.
Thus far, 25.7%, or 85 million Americans have received at least one dose of the vaccine and 14% or 46.3 million have received two doses. President Joe Biden pledged this week to double his administration’s original goal to 200 vaccine doses in by his 100th day in office.
Energy producers and health care companies outperformed their peers on the last trading day of the week. Bank shares also rose after the Federal Reserve Thursday afternoon announced that banks can raise dividends and resume share repurchases after June 30.
Here’s where US indexes stood at the 4 p.m. ET close on Friday:
Cathie Wood’s ARK Autonomous Technology & Robotics ETF recently bought 800,494 shares in Jaws Spitfire Acquisition Corp, a SPAC backed by tennis champion Serena Williams. Among the fund’s biggest holdings are Tesla, JD.com, Baidu, and Alphabet.
Root jumped as high as 20% as Citron’s Andrew Left published a report saying the highly-shorted auto-insurance company is “a misunderstood short.”
Financial technology firm SoFi announced that it will be allowing its users to directly invest into initial public offerings, an opportunity usually reserved for institutional investors. SoFi’s announcement comes a day after Robinhood said it is looking to allow its users to also buy directly into IPOs, including its own upcoming public debut.
UBS Wealth Management said bitcoin’s “limited real-world use” and “extreme volatility” illustrate the cryptocurrency’s recent surge is still a speculative bubble. In a note on Friday, UBS said it remains “unconvinced” by bitcoin.
In the UK, cryptocurrency firms DMG Blockchain Solutions and Argo Blockchain are launching Terra Pool, the world’s first bitcoin mining pool powered by clean energy in an attempt to better manage the impact of bitcoin mining on the climate.
Oil prices edged higher, bouncing back from Thursday’s slide, on news that it could take weeks for experts to dislodge the massive 220,000-ton container ship blocking the Suez Canal for around four days now.
Forget the pandemic. Inflation is the new issue haunting Americans, on Wall Street and Main Street alike.
Celebrations over vaccine approvals and falling COVID-19 case counts are giving way to concerns over just how quickly the economy will recover – and what that means for prices.
New stimulus signed earlier this month promises to send hundreds of billions of dollars directly to Americans and supercharge consumer spending. And shortly afterward, the central bank underscored that it will support a strong recovery this year, as the Federal Reserve reiterated that it plans to maintain ultra-easy financing conditions at least through next year.
The potent combination of monetary and fiscal support has many fearing a sharp jump in inflation. The eventual reopening of the US economy is expected to revive Americans’ pre-pandemic spending habits. Yet an overshoot of expected inflation could spark a cycle of increasingly strong price growth that leaves consumers with diminished buying power.
Worries of such an outcome are shared among both the investor class and the general public. Google searches for “inflation” surged to their highest level since at least 2008 last week, according to research by Deutsche Bank Managing Director Jim Reid. Dovish investors might highlight that similar spikes emerged after the financial crisis, but hawks can point to the unprecedented scale of pandemic-era relief for why today’s situation stands out, Reid said in a note to clients.
“Whether or not inflation ever materializes there is a rational reason why this time might be different. That’s reflected in the increased attention on inflation,” Reid added.
The theme that this time might be different was echoed by a UBS team led by Arend Kapteyn, who wrote in a March note that “pandemic price movements have been unusually large … and are historically difficult to model/predict.”
More recently, a survey from data firm CivicScience shows 42% of adults being “very concerned” about inflation, according to Axios. That compares to just 17% saying they’re “not at all concerned.”
Inflation worries investors more than Covid
Also, institutional investors are shifting their focus from the pandemic to the risk of rampant inflation. Higher-than-expected inflation is now the biggest tail risk among fund managers, according to a recent survey conducted by Bank of America, higher even than the pandemic itself. Snags to vaccine distribution fell from the top of the list to third place, while a potential bond-market tantrum was the second most-feared risk.
To be sure, younger Americans seem less perturbed. The gap in inflation expectations between the baby boomer generation and millennials is the widest its ever been, a team of Deutsche Bank economists led by Matthew Luzzetti wrote earlier this month.
The disparity is likely a product of vastly different circumstances, according to the team. Older investors lived through the “Great Inflation,” a period from the mid-1960s to the early 1980s during which inflation surged and forced interest rates to worrying highs.
Younger Americans have only known a quarter-century of inflation landing below the Federal Reserve’s 2% target, and millennial investors could have a massive influence on whether inflation expectations and real price growth trend higher as the economy reopens, the bank’s economists said.
“With memories of the Great Inflation possibly already lifting inflation expectations for older age groups today, a more material drift higher in expectations likely would require a lift from the younger age groups,” they added.
CivicScience’s newer data suggests that gap is quickly closing. More than half of respondents aged 18 to 24 said they’re “very concerned” about inflation, more than any other age group surveyed. By comparison, just 37% of Americans aged 55 and older said they’re “very concerned.”
Respondents aged 35 to 54 were still the most worried overall, with 48% saying they’re “very concerned” and 36% saying they’re “somewhat concerned,” according to CivicScience.
Kapteyn’s note for UBS highlighted that the conversation around inflation closely resembles the one following the Great Recession: “A decade ago, following the global financial crisis, we were having very similar conversations with clients as we are now.”
At that time, fears of a quick recovery fueling an inflation bubble were similarly strong, “but instead we wound up in secular stagnation,” the bank wrote, referencing the phrase made famous by prominent economist Larry Summers to describe prolonged low growth and low inflation.
This suggests that Americans’ worries about future price growth – including warnings from Summers himself – could starve the US economy of healthy growth and rehash the last decade’s plodding recovery.
Yet some of the hardest-hit industries are now leading the recovery as they finally start to rehire workers after months of layoffs and furloughs, according to data from job search websites viewed by Insider.
Healthcare, retail, sit-down restaurants, and even hospitality businesses are seeing major job growth, as are pandemic-tested jobs in manufacturing, software development, warehouse and logistics. However, education and public sectors still lag behind, based on Insider’s analysis of government data and insights from five top job posting websites – Flexjobs, Indeed, Joblist, Monster, and Snagajob.
If you’re one of the many Americans still looking for work, here are some of the industries that are hiring at the fastest rates.
Hospitality and leisure
After hospitality jobs dropped by 63% last April, more than any other industry, they’re finally starting to bounce back – and the industry is even leading the US’ recent surge in job growth as lockdown orders begin to ease. Out of the 379,000 jobs added last month, 355,000 came from the hospitality industry, according to the latest job report from the Bureau of Labor Statistics.
As of March 15, hospitality jobs on Snagajob were up 54% from mid-February and 141% from last March. Indeed’s latest jobs report, using data through March 12, found that hospitality jobs were still down 27% from their pre-pandemic baseline of February 1, but had still seen an 8% jump from four weeks ago.
But the hospitality industry’s long-term outlook still depends heavily on whether and when business travel picks up again, with many experts predicting that companies will permanently cut back on travel expenses.
As more states allow sit-down dining again, restaurants are quickly ramping up to meet customers’ pent-up demand. Of the 355,000 hospitality jobs added in February, the BLS said that 286,000 – around 80% – came from restaurants and bars.
Snagajob found that sit-down restaurants saw a 16% month-over-month spike, even as quick-service restaurants were flat during that same time. Joblist CEO Kevin Harrington said server, bartender, and host jobs have all been growing recently.
Retail stores added 41,000 jobs last month, according to BLS data, though Indeed found that it’s been a mixed bag in metro areas where many people are working from home.
But Snagajob found that retail jobs are up 62% month-over-month, and, fueled by e-commerce, up 259% since mid-March 2020.
Despite the global pandemic, healthcare jobs tanked over the past year as people canceled routine checkups, preventative treatments, and elective surgeries, forcing hospitals to cut various jobs.
“More than two million healthcare jobs were lost in April 2020 alone, and only about half of these jobs have returned since,” Harrington said, adding that a recent Joblist survey “found that more than 50% of working Americans reported skipping medical or dental care in the last year.”
But amid the country’s massive vaccination effort, pharmacy jobs are up 10.9% from mid-February and 49.2% from February 1, 2020, while nursing and medical-technician jobs are also on the rise, according to Indeed.
Gig work, on-demand, and freelance jobs
The gig economy, which included a large, growing, and hard-to-measure segment of the US’ blue- and white-collar workforces even before the pandemic, saw a major boost as Americans scrambled to find any source of income.
Snagajob has seen posts for on-demand jobs increase 53% month-over-month and a whopping 470% year-over-year, while Joblist saw a 40% jump in “freelance” jobs last summer.
“This trend has continued in recent months as companies embrace remote freelancers as an alternative to making full-time hires in this uncertain economic climate,” Harrington said. “The supply of skilled remote labor is as high as it has ever been right now, and many companies have now figured out how to conduct business remotely.”
While blue-collar gig jobs may have shifted from moving people to moving food, packages, and other goods, during the pandemic, Harrington said all types of gig work are here to stay.
Major companies like Amazon, Uber, Google, and Facebook already make widespread use of contractors because they’re cheaper, pose less legal risk, and allow companies to grow and shrink their workforces more flexibly. Other industries are increasingly adopting this model.
Warehouse and logistics jobs
The boom in e-commerce during the pandemic sparked a rise in warehouse jobs that has continued even past the holiday season.
Snagajob found a 38% month-over-month jump in warehouse and logistics jobs, and Indeed saw a 7% rise in loading and stocking jobs since mid-February. Longer term, Indeed has seen loading and stocking jobs climb 44.7% since its pre-pandemic baseline, and Joblist saw more than a 100% jump year-over-year in warehouse jobs.
Tech and technical positions
As was the case before the pandemic, there’s once again significant demand for software engineers and project managers, according to Joblist, while Monster has seen a spike in jobs involving computational and math skills.
Remote-friendly business functions
While not industry-specific, job postings for business roles that can be done remotely have soared during the pandemic as companies become more accepting of remote workforces.
Flexjobs said the top 10 career categories that had an increase in remote job openings from March 2020 to December 2020 included: marketing, administrative, HR and recruiting, accounting and finance, graphic design, customer service, writing, mortgage and real estate, internet and e-commerce, and project management.
Construction, government, and education jobs still lagging
Some industries have yet to restart hiring efforts in significant numbers – and some even continue to bleed jobs.
Monster and Joblist have both seen recent declines in construction jobs, partly due to the winter weather and related supply chain issues.
State and local government jobs also declined recently, according to Joblist and BLS data, while Flexjobs also found a lower availability of remote jobs in this sector.
School closures and plummeting college enrollment rates during the pandemic hit schools’ pocketbooks hard, and many have yet to bounce back. Indeed found just a 2.7% increase in teaching jobs since mid-February, down 4.6% since pre-pandemic days.
US stocks fell on Friday after the Fed announced that its temporary pandemic-era rule that relaxed bank capital requirements will not be extended after March 31. That offset the positive effect of stabilizing bond yields, which then spiked on the news.
Bond yields have risen as investors grow concerned that the $1.9 trillion fiscal stimulus will cause a rise in inflation, leading the Federal Reserve to change policy and raise rates sooner than expected.
Chetan Ahya – Morgan Stanley’s chief economist – is concerned that a rapid labor-market recovery could push inflation levels to spike and breach the Fed’s 2.5% inflation “tolerance threshold” as soon as 2022. That could bring a “disruptive shift in expectations for Fed tightening,” and lead to heightened stock market volatility down the road, he said on a recent podcast.
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Friday:
Oil prices extended losses after tumbling 7% on Thursday as investors second-guessed the recent rally and reacted to the slow rollout of coronavirus vaccines in Europe that could dent demand growth. West Texas Intermediate crude fell as much as 1.6%, to $59.06 per barrel. Brent crude, oil’s international benchmark, fell by 1.6%, to $62.24 per barrel, at intraday lows.
Gold jumped slid as much as 0.5%, to $1,728.57 per ounce.
Federal Reserve policymakers boosted their projections for the US economic recovery on Wednesday as new stimulus and vaccine rollouts pave the way for a summer reopening.
The Federal Open Market Committee’s median estimate for 2021 gross domestic product growth rose to 6.5% this year, and 3.3% for 2022. That compares to the previous forecasts of 4.2% and 3.2%, respectively. The unemployment rate is now expected to dip to 4.5% this year, an improvement from the prior forecast of 5%.
The estimates are the first to be published since December, and therefore are the first to include the impact the $900 billion stimulus package passed late last year, the $1.9 trillion plan signed earlier this month, and the improved pace of vaccination. The developments have all been viewed as major boons to the economic rebound and prompted several economists to lift their own growth forecasts.
The nation’s fight against the coronavirus has also shifted significantly since the December FOMC meeting. Daily case counts surged to a peak above 300,000 in early January but have since tumbled to around 50,000 as distancing measures and vaccination curbs the pandemic’s spread.
New stimulus has been criticized by Republicans for risking runaway inflation through the recovery. Fed officials have countered such concerns in recent weeks. Jerome Powell has repeatedly said that, although reopening and stimulus can produce a quick jump in inflation, the effect will likely be temporary and give way to a similarly sharp decline.
The FOMC’s latest estimates reflect such an outlook. Members see personal consumption expenditures inflation – the Fed’s preferred price-growth gauge – reaching 2.4% in 2021, up from the previous 1.8% estimate. Inflation will then fall to 2% in 2022 and reach 2.1% the following year.