Jobs Surge By 2.5 Million: ‘The biggest payroll surprise in history’

Total jobs

The U.S. jobless rate fell to 13.3% and employers added 2.5 million jobs in May.

Market Watch quotes one economist as saying:

The biggest payroll surprise in history, by a gigantic margin, likely is due to a wave of hidden rehiring. Businesses which let people go in large numbers in March didn’t need to post their intention to bring people back on. Indeed, they just needed to call/text/email.

Well, it shouldn't be a surprise, as I have been pointing out for months, what we are experiencing is not a business cycle downturn. It is a government-imposed lockdowns downturn, which is very different.

On March7, I wrote during the early stages of the panic:

I see the current Wuhan coronavirus panic as different from a business cycle panic.

A business cycle panic is the result of central bank manipulation of the money supply and interest rates which results in a distortion of the capital-consumption ratio (the CC ratio) in the economy. When a central bank stops propping up the distorted CC ratio, the bust phase of the business cycle occurs which readjusts the CC ratio toward what its natural unmanipulated structure would be.

That is not what is going on now. What we are facing is supply disruptions out of China and panic cancellation of events here in the US and panic selling on Wall Street.

This causes problems in the US but they are different problems from Fed-created boom-bust problems.

You could have an economy with no central bank manipulations and, therefore, no CC ratio distortions but still have problems in the economy if you have the kind of supply disruptions and panics we are now experiencing...Once the general panic subsides, I expect certain areas of the economy to positively boom.

On May 24, I went into more detail:

Of course, this won't be 100% because some barely profitable businesses will stay shut and new government regulations may make it difficult for other businesses to restart, but overall it will be much different than the unemployment situation coming out of the GR.

I would guess that much more than 50% of those currently laid off because of the lockdown will be able to return to their old jobs.

Most economists don't understand the business cycle so they have no clue as to why what is going on now is very different from a business cycle downturn and at the same time Austrian-lites are always banging the downturn theme.

The analysis you are getting here and in the EPJ Daily Alert, you can not get anywhere else.

-RW