US Jobs Figures

US Non-Farm payroll data has shown an unexpected rise of 2.5 million jobs for May, as the US lock down ends, and workers have been able to start returning to work.  It fits with what I wrote in a comment to Michael Roberts' Blog a few weeks ago.

"It depends how long lockdowns last. So, far we have sizeable reductions in new value created, not actual destruction of capital, which would take many more months. Much of the labour is precarious, largely underemployed, or disguised unemployment, which has been a cause of low productivity."

It also coincides with a series I have written on Post-COVID prices and revenues that will start to appear on 9th June, in which I argue that the pundits who have suggested that the economic slowdown caused by the lockdown will result in disinflation and lower for longer interest rates, are wrong.  As I also pointed out in that comment,

"All of the money printed, in conditions of constrained production and supply means that as soon as lockdowns are released inflation will rise sharply. All of the additional borrowing also means interest rates will rise causing a huge fall in asset prices."

None of that changes the fact that the self-harm caused to economies by the lock down of social activity has caused the biggest economic slowdown in 300 years, which will itself have far reaching consequences, and for far longer than the effects of COVID19.  In the US, despite the 2.5 million additional jobs - nearly all laid off workers that have been brought back - unemployment has risen by 40 million, as a result of the lock down, and the rate still stands at 13.7%, about 30% higher than it was at the worst point in the recession caused by the 2008 Financial Meltdown.  Millions of those workers, notably the ones in the most precarious jobs, the most vulnerable in society, will not return to work quickly, and as the economy grows more rapidly, as the money that has been going into financial and property speculation instead goes into real investment in the real economy, the jobs that will be created will not be ones that those precarious workers are suited to take up.  Again as I wrote in that comment,

"So, its quite possible that rising inflation – rising money profits too – along with a crash in asset prices, will drive money into real capital accumulation, causing a sharp increase in growth."

But, it will go along with a rise in productivity,

"A shake out of the small capitalists and new concentration of capital will be good for growth."

As I will demonstrate in the series starting next week, the current surge in stock markets fuelled once more by all of the money printing will be a flash in the pan, as all of the borrowing at a time of rising costs leads to a rise in interest rates which will crash the prices of financial and property assets.  It will reverse the conditions of the last thirty years, and see the long wave uptrend, put into hibernation after 2010, resume.