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U.S. gains 916,000 new jobs in March and signals strengthening economy – MarketWatch

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The numbers: Restaurants and other businesses hired the most workers in March in seven months as the U.S. added 916,000 new jobs, signaling the economy is primed for a period of rapid expansion again.

Employment accelerated after the weather warmed and a decline in coronavirus cases allowed states to relax business restrictions. Rising vaccination rates gave Americans more freedom to venture out to eat, attend a game, travel or engage in other activities they would have avoided at the height of the pandemic.

Massive federal fiscal stimulus, including $1,400 checks for most households, also gave people more money to spend.

The U.S. regained 916,000 jobs in March to mark the biggest increase since last fall.


olivier douliery/Agence France-Presse/Getty Images

The jobs explosion in March easily exceeded Wall Street forecasts. Economists polled by Dow Jones and The Wall Street Journal had forecast a 675,000 increase.

Hiring in February and January was also much stronger than previously reported.

Read: U.S. adds 517,000 private-sector jobs, ADP says, as economy speeds up

Economists predict even faster hiring in the months ahead if most Americans get vaccinated and the coronavirus pandemic fades away, though it will take a while to know for sure. Covid-19 cases in the U.S. have actually risen slightly in the past few weeks for the first time in several months.

Read: Consumer confidence surges to a pandemic high

The official unemployment rate, meanwhile, slipped to 6% from 6.2%, the Labor Department said Friday. Yet the official rate doesn’t capture nearly 4 million people who lost their jobs last year and left the labor force.

Economists peg the true unemployment rate at above 9%.

Read: Is the U.S. unemployment rate really 6%? Not even close

What happened: Companies in leisure and hospitality hired the most people in March. They added 280,000 jobs to bring total employment gains in the past two months to 664,000.

Restaurants were at the forefront, creating 176,000 new jobs. More Americans are going out to eat and the numbers are expected to grow as most of the country gets vaccinated and spring arrives. People are eager to go out after being stuck at home for the past year.

Employment in construction bounced back after a decline in February tied to poor weather. Builders hired 110,000 people, the largest increase in nine months.

Soaring home sales and a revival in commercial construction are fueling the biggest industry boom in more than a decade. The biggest problem is finding enough skilled workers.

Manufacturers, for their part, added 53,000 workers. The industrial side of the economy is also growly rapidly again and leading the U.S. recovery. Demand in many cases is so strong that companies can’t find enough raw materials, parts or other supplies to keep up.

Government employment also surged in March, mostly in state and local education. Some 136,000 jobs were added.

Hiring rose in every other major part of the economy except information services, a catchall category that includes media and public relations.

The number of jobs created in the first two months of the year was also revised up by a combined 156,000

The number of jobs created in February was revised 468,000 from 379,000. The increase in January was lifted to 233,000 from 166,000.

Read: Manufacturers grow at fastest pace since pandemic

Nearly 350,000 people joined the labor force in March in another good sign, but the total is still about 3.9 million below pre-pandemic levels. Those missing workers are no longer counted in the official unemployment rate, helping to explain why it’s relatively low now.

A better measure of unemployment is the government’s so-called U6 rate that includes people who’ve recently stopped looking for work as well as those who can only find part-time jobs.

The U6 rate fell to 10.7% from 11.1%. It had reached a record 22.9% last April.

Read: It’s no time to celebrate unemployment applications falling below 1 million

Big picture: The skies have cleared for the U.S. economy after a record surge in coronavirus cases clouded the outlook over the winter. Growth is likely to speed up through the spring and early summer if the vaccines do their job and keep the coronavirus pandemic at bay.

Yet even in a best-case scenario, the U.S. is unlikely to quickly recoup all of the 8.4 million jobs that are still missing one year after the onset of the pandemic. The destruction caused by the pandemic, including lost jobs and shuttered businesses, is likely to linger for a few years.

See: A visual look at how an unfair pandemic has reshaped work and home

What they are saying? “Job growth is now accelerating across the nation, helped by massive fiscal stimulus and a now speedy vaccination program,” said senior economist Sal Guatieri of BMO Capital Markets.

“While we still have a long way to go to repair the damage that was done to the economy last year, we’re making good progress,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance  

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.52%

and S&P 500
SPX,
+1.18%

closed higher on Thursday to finish out a shortened week. Markets are closed on Friday due to the Good Friday holiday.

See also: ‘There is finally real light at the end of the tunnel’ — economists react to strong March jobs report

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New Zealand's Economy Was Humming Prior to Delta Lockdown – BNN

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(Bloomberg) — New Zealand’s economy was expanding at a rapid pace before a nationwide lockdown interrupted its momentum, latest data show. 

Gross domestic product climbed 2.8% in the second quarter after jumping 1.4% in the first, Statistics New Zealand said Thursday in Wellington. Economists forecast a 1.1% gain. From a year earlier, when the country was in its initial pandemic lockdown, the economy expanded 17.4% against expectations of 16.1% growth.

Today’s report will do nothing to dissuade the central bank from raising interest rates at its next meeting on Oct. 6 as it frets about mounting inflation pressures. While a contraction is expected in the current quarter after an outbreak of the delta strain of coronavirus prompted a three-week national lockdown, last year’s experience shows that demand quickly bounces back when restrictions are lifted. 

The New Zealand dollar rose on the data. It bought 71.29 U.S. cents at 10:47 a.m. in Wellington, up from 71.2 cents beforehand.

©2021 Bloomberg L.P.

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Global economy projected to show fastest growth in 50 years – UN News

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In its new report released on Wednesday, the agency said that the rebound was highly uneven along regional, sectoral and income lines, however.  

During 2022, UNCTAD expects global growth to slow to 3.6 per cent, leaving world income levels trailing some 3.7 per cent below the pre-pandemic trend line. 

The report also warns that growth deceleration could be bigger than expected, if policymakers lose their nerve or answer what it regards as misguided calls for a return to deregulation and austerity. 


Two women check industrial looms in a rug factory in Mongolia. International rules and practices have locked developing countries into pre-pandemic responses

Differences in growth 

The report says that, while the response saw an end to public spending constraints in many developed countries, international rules and practices have locked developing countries into pre-pandemic responses, and a semi-permanent state of economic stress. 

Many countries in the South have been hit much harder than during the global financial crisis. With a heavy debt burden, they also have less room for maneuvering their way out through public spending. 

Lack of monetary autonomy and access to vaccines are also holding many developing economies back, widening the gulf with advanced economies and threatening to usher in another “lost decade”. 

“These widening gaps, both domestic and international, are a reminder that underlying conditions, if left in place, will make resilience and growth luxuries enjoyed by fewer and fewer privileged people,” said Rebeca Grynspan, the secretary-general of UNCTAD. 

“Without bolder policies that reflect reinvigorated multilateralism, the post-pandemic recovery will lack equity, and fail to meet the challenges of our time.” 

Lessons of the pandemic 

UNCTAD includes several proposals in the report that are drawn from the lessons of the pandemic. 

They include concerted debt relief and even cancellation in some cases, a reassessment of fiscal policy, greater policy coordination and strong support for developing countries in vaccine deployment. 


Women sell fruit and vegetables on a sidewalk in the Philippines, where workers in the informal economy are in danger of having their livelihoods destroyed by the impacts of COVID-19.

ILO/Minette Rimando.

Women sell fruit and vegetables on a sidewalk in the Philippines, where workers in the informal economy are in danger of having their livelihoods destroyed by the impacts of COVID-19.

Even without significant setbacks, global output will only resume its 2016-19 trend by 2030. But even before COVID-19, the income growth trend was unsatisfactory, says UNCTAD. Average annual global growth in the decade after the global financial crisis was the slowest since 1945. 

Despite a decade of massive monetary injections from leading central banks, since the 2008-9 crash, inflation targets have been missed. Even with the current strong recovery in advanced economies, there is no sign of a sustained rise in prices. 

After decades of a declining wage share, real wages in advanced countries need to rise well above productivity for a long time before a better balance between wages and profits is achieved again, according to the trade and development body’s analysis. 

Food prices and global trade 

Despite current trends on inflation, UNCTAD believes the rise in food prices could pose a serious threat to vulnerable populations in the South, already financially weakened by the health crisis. 

Globally, international trade in goods and services has recovered, after a drop of 5.6 per cent in 2020. The downturn proved less severe than had been anticipated, as trade flows in the latter part of 2020 rebounded almost as strongly as they had fallen earlier. 


Lack of monetary autonomy and access to vaccines are also holding many developing economies back

Lack of monetary autonomy and access to vaccines are also holding many developing economies back, by ILO/K.B. Mpofu

The report’s modelling projections point to real growth of global trade in goods and services of 9.5 per cent in 2021. Still, the consequences of the crisis will continue to weigh on the trade performance in the years ahead. 

For director of UNCTAD’s globalization and development strategies division, Richard Kozul-Wright, “the pandemic has created an opportunity to rethink the core principles of international economic governance, a chance that was missed after the global financial crisis.” 

“In less than a year, wide-ranging US policy initiatives in the United States have begun to effect concrete change in the case of infrastructure spending and expanded social protection, financed through more progressive taxation. The next logical step is to take this approach to the multilateral level.” 

The report highlights a “possibility of a renewal of multilateralism”, pointing to the United States support of a new special drawing rights (SDR) allocation, global minimum corporate taxation, and a waiver of vaccine-related intellectual property rights.  

UNCTAD warns, though, that these proposals “will need much stronger backing from other advanced economies and the inclusion of developing country voices if the world is to tackle the excesses of hyperglobalization and the deepening environmental crisis in a timely manner.” 

For the UN agency, the biggest risk for the global economy is that “a rebound in the North will divert attention from long-needed reforms without which developing countries will remain in a weak and vulnerable position.”

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From Coordination to Collapse in Rigged Economies – Physics

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September 15, 2021• Physics 14, 129

A game-theoretical model of a rigged economy predicts the emergence of cartels followed by a risk of instability as the economy becomes more complex.

Hans Holbein (1543)

Figure 1: King Henry VIII and the Barber Surgeons by Hans Holbein the Younger. Medieval guilds played negative as well as positive roles by rigging the economy: They acted as cartels to privilege their members while at the same time working in concert to promote property rights and to prevent the arbitrary use of power by monarchs.King Henry VIII and the Barber Surgeons by Hans Holbein the Younger. Medieval guilds played negative as well as positive roles by rigging the economy: They acted as cartels to privilege their members while at the same time working in concert to promo… Show more

“The economy is rigged!” This claim, which was voiced by both Bernie Sanders and Donald Trump during their 2016 presidential campaigns, might be the only belief shared by people from opposite ends of the political spectrum. But what does “rigging” mean for the economy and its dynamics? Luís Seoane at the National Center for Biotechnology in Spain has now addressed this question by modeling the economy as a system of “games” that agents can rig—for a price [1]. The study reveals that the rigged economy undergoes a sequence of transitions as its complexity and size increase, with “cartels” forming and then dissolving. Although these transitions appear to imply that economic development will ultimately make the economy fairer, Seoane shows that if an economy’s size does not keep pace with its rising complexity, large fluctuations in wealth distribution can occur, causing inequality to rise steeply and making the economy liable to collapse.

The use of games to study economic phenomena dates back to the work of John von Neumann in the middle of the last century [2]. The theory quickly became the lingua franca for economists and subsequently emerged as an area of inquiry for the physics community. For example, statistical physicists have shown that versions of the “minority game”—in which several agents choose between two possibilities, with the option chosen by fewest agents becoming the winning choice—can be used to explore the rich emergent properties of simple adaptive systems [3].

Minority games can be used to model situations in which agents compete for scant resources—including financial markets. However, the economy is also marked by phenomena in which the advantage lies with those in the majority, for example, when positive feedback reinforces a particular choice, such as joining a boycott [4]. Seoane shows that rigged economies exhibit features of both minority and majority games [5, 6].

In Seoane’s model, multiple agents engage in a number of games simultaneously. Each game involves choosing one of two possible actions. An agent can also choose to pay to rig a game to favor its choice. The winning choice in each round is the action chosen by the majority of the agents who have paid to intervene. Increasing the number of games played in each round increases the degrees of freedom in the economy and is thus a measure of its complexity. After each round of a game, the winners share a fixed amount of money equally. The value of the winnings multiplied by the number of games played defines the total “wealth” that can be redistributed among the agents in each round. This wealth is thus a measure of the size of the economy and, along with complexity, is a key parameter of the model.

To observe how the optimal strategy for an agent changes as the economy develops, Seoane includes in the model an evolutionary process: Agents can replicate themselves after each round, such that each offspring has a high probability of adopting the same strategy as its parent. Since replication costs a fixed amount, more successful agents reproduce in greater numbers.

Seoane observes that, for a fixed level of complexity, a small economy yields agents with diverse strategies and a general preference to be in the minority when they win (to claim more of the prize pot in each round). As the economy increases in size, more wealth becomes available for agents to create progeny, as well as to pay the intervention costs required to rig games. Then, agents switch from playing minority games to majority games, meaning growing economies transition to coordination between agents (cartel formation), with an accompanying drop in strategic diversity. However, if the complexity (the number of games per round) increases faster than the economy grows, the relative returns per game are diminished, causing agents to seek minority positions across multiple games. This switch leads to the dissolution of cartels and a rise in the diversity of strategies employed by the agents.

Seoane also studies how an economy fares under other size-complexity relations. For example, he finds that when the amount disbursed in each game is constant, such that the size of the economy increases linearly with the number of games, there is a critical “complexity threshold” at which the distribution of agent-population size transitions from unimodal to bimodal. This transition gives rise to extremely large fluctuations in agent populations that threaten the stability of the economy. The distribution of agent wealth also exhibits a crossover at this point, becoming broad-tailed in the large-fluctuation regime, indicating rising inequality among agents. A reader familiar with the world’s economy today will likely see eerie parallels with this regime of the model.

It could be argued that some of the outcomes observed by Seoane come from the specific choices he makes in constructing the model. For example, the transition to coordinated action as the economy grows might result from the assumption that intervention costs are constant. In reality, intervention costs are related to the size of the economy and vary between players. Another important limitation of the model is that all agents are equally able to rig games—an assumption that misses the asymmetric influence of the wealthy in real economies [7].

Even with these limitations, Seoane’s model is significant in that it provides a framework for others to explore the ramifications of real-world rigged economies, such as those in which information is unevenly distributed among agents. Modifying the model might, for example, reveal how informationally disadvantaged agents can use the emergence of coordination to obtain advantage, as seen in other agent-based models [8]. Such counter-rigging of the system by less powerful players is shown by the history of the medieval merchant guilds. Those institutions used the threat of coordinated embargo to resist arbitrary expropriation by powerful local rulers [9], proving that a rigged economy does not necessarily imply that David doesn’t stand a chance against Goliath.

References

  1. L. F. Seoane, “Games in rigged economies,” Phys. Rev. X 11, 031058 (2021).
  2. J. von Neumann and O. Morgenstern, Theory of games and economic behavior (Princeton University Press, Princeton, 1944)[Amazon][WorldCat].
  3. D. Challet et al., Minority games: Interacting agents in financial markets (Oxford University Press, New York, 2005)[Amazon][WorldCat].
  4. T. C. Schelling, Micromotives and macrobehavior (W. W. Norton, New York, 1978)[Amazon][WorldCat].
  5. J. Vitting Andersen and D. Sornette, “The $-game,” Eur. Phys. J. B 31, 141 (2003).
  6. Y. Baek et al., “Market behavior and performance of different strategy evaluation schemes,” Phys. Rev. E 82, 026109 (2010).
  7. J. E. Stiglitz, “The American economy is rigged,” Sci. Am. 319, 56 (2018).
  8. V. Sasidevan et al., “When big data fails: Adaptive agents using coarse-grained information have competitive advantage,” Phys. Rev. E 98, 020301 (2018).
  9. A. Greif et al., “Coordination, commitment, and enforcement: The case of the merchant guild,” J. Polit. Econ. 102, 745 (1994).

About the Author

Image of Sitabhra Sinha

Sitabhra Sinha is a professor of theoretical physics and the dean of the Computational Biology Graduate Program at the Institute of Mathematical Sciences (IMSc) in India. He did his Ph.D. at the Indian Statistical Institute, Kolkata, and postdoctoral research at the Indian Institute of Science, Bangalore, and at the Weill Medical College of Cornell University, New York, joining the faculty of IMSc in 2002. His research falls broadly under complex systems, nonlinear dynamics, and statistical physics, with applications to systems biology, economic and social sciences, and computational linguistics.


Subject Areas

Complex Systems

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