Employment points to an L shaped recovery for most

The U.S. nonfarm payrolls for January came in with a gain of 49,000.

Revisions to earlier months showed a decline for both November and December by a total of 159 thousand.

Government payrolls rose 43 thousand vs. private payrolls up 6 thousand. Education workers grew.

The unemployment rate (U3), however, fell to 6.3%, well below market expectations of 6.7%.

The U6 unemployment rate—which is the U3 rate plus short-term discouraged plus other marginally attached workers and those forced to work part-time because they can’t find full-time work—fell to 11.1% from 11.7%.

The ShadowStats unemployment rate, which is the U6 rate plus long-term discouraged workers and defined out of the labour force in 1994, fell to 25.7% from 26.2%

The Shadow Stats number translates into 41.2 million workers of which just under half are receiving some kind of benefits.

The labour force participation rate fell to 61.4% from 61.5% while the employment population ratio was 57.5% vs. 57.4%.

Most who lost their jobs were at the lower end of pay scales and worked fewer hours.

Bottom line, 9.9 million are out of work. The employment situation is worse than many people think.

Overall, the employment situation is not healthy.

So to replace all these lost workers by end-2022 – when consensus expects the first rate to take place – and accounting for natural labor-market growth, means we will need an average payrolls figure of over 500,00 every month through to next December.

It still shows great disparity between the haves (fulltime professionals) and the have-nots (parttime workers in leisure, hospitality, and retail). The K recovery and continued polarization even in the jobs market.

All of this continues to point towards an L recovery for a big chunk of the population while the upper echelons benefit from continued employment and rising stock markets.