Moneybeat – A long way from recovered


MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: We’re talking now with financial analyst and adviser David Bahnsen. David, good morning.

DAVID BAHNSEN, GUEST: Good morning, Nick. Good to be with you.

EICHER: Well, that November jobs report—pretty much in line with expectations. About a quarter of a million jobs added, which maybe sounds impressive, but we’re still digging out of the unprecedented job losses from March and April. We’re just a long way from recovered. 

The unemployment rate ticked down from 6.9 percent to 6.7 and it dropped for a bad reason, namely that fewer people are even looking for jobs. So overall it’s what we expected for November but cause for concern.

What do you draw from it?

BAHNSEN: There wasn’t a ton of surprises in it for me.  

The labor participation force dropping is reinforcement, I think, of the real human damage being done out of this COVID moment and all of the shutdowns. 

Because of course you have all of the people that would like to be working that are not working and that’s reflected in the unemployment number. But the people leaving the labor force, that—as I learned out of the financial crisis—I got to study this quite a bit, wrote a whole chapter on it in my book, Crisis of Responsibility. You get people leaving the workforce, so there’s the economic impact of people not working. But then the human impact follows because the dignity, the usefulness, the productivity, you really want people to find jobs, but before that, you want people who are looking for jobs. And I think that there’s a lot to be concerned about in that data.

EICHER: Yes, labor force participation rate—a way of measuring the number of discouraged workers—and the concern is maybe they might not be back for awhile.

BAHNSEN: Yes. And you can always have people that “leave the workforce” that then come back. And that’s what you were seeing, by the way, for the first three years of the Trump administration. It was a pretty significant increase of people that were in the workforce—both finding work and looking for work.

But, yes, that number has declined in the COVID moment. It was down two-tenths of a percent in the month of November, down to 61.5 percent and that’s something that I really want to keep my eyes on.

EICHER: OK, shifting from the backward-facing analysis of November to the week by week jobs figures you’re also keeping an eye on—that was looking a little better.

BAHNSEN: It was. I have no doubt that we have recovered over half of the jobs now that were lost. I’m going to use round numbers, but something in the range of 21 million people that lost work in that March-April really heavy national lockdown. And I think it’s somewhere in the range of 11 million plus change, so a little over half, that have recovered either those jobs or a different job. 

But I think that the numbers indicate that we’re still sitting at something in the range of nine to 10 million people that have not recovered those jobs and a pretty obvious reflection of some of these lockdowns or constrictions that continue to exist.  

But if we have time, Nick, I will point out something that I’ve learned from Europe over the last month. I’m really, really offended and bothered by what a lot of mayors and governors are doing right now here in America. But it is interesting to me that there’s almost as much gamesmanship going on as there is bad policy. And this is what I mean by the lockdowns in Europe, where France, Germany, UK was a bit more stringent, actually, but when they come and say we’re locking down again and when you hear lockdown, you’re referring to the lockdowns in March-April where factories, businesses, retail, schools. 

Well, now they’re saying we’re locking down again, except for the factories, businesses, stores, and schools. And so certainly some of those are still shut down, but they’re primarily renaming what the definition of a lockdown is. And that’s why I mean you have to watch the data, Nick, because I’m not convinced it’s going to retract as much as some people are expecting.

I’m back here in New York City and I can tell you that they kind of got strict again on certain things, and yet the retail is open. It wasn’t open before. The restaurants are open but at limited capacity. So, I do believe that the policies are damaging and I do believe the economy is nowhere near on a full footing, and yet I don’t believe we’re talking about March-April levels by any stretch of the imagination.

EICHER: Interesting. Why would you say something people don’t want to hear—more lockdown—call it that, but don’t actually lock it down so tightly. Why would you do that?

BAHNSEN: The reason that I believe a significant amount of effort is being put into selling and bragging about or trying to get credit for strictness and some people might even be tempted to call it totalitarianism, is because they’re setting it up for a narrative to say we took it seriously. 

So, there’s an inevitability here of improvement, both pre-vaccine and during vaccine and post-vaccine. The more people who get sick and get better, the less people there are to get sick. This isn’t really a mystery. And I think there’s a narrative being formed to say, hey, there was a period of time where we just weren’t taking this seriously enough, but now some real serious people came in and we got everything better. And it will probably end up being one of the greatest post-hoc fallacies in history.

EICHER: Hmm. Let’s give it a few months and see.

Financial analyst and adviser David Bahnsen, thank you.

BAHNSEN: Thanks for having me, Nick.


(AP Photo/Seth Wenig) The New York Stock Exchange is seen in New York, Monday, Nov. 23, 2020. 

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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