As we enter Spring it is important to reflect upon the first quarter of 2021, which ended on March 31st. The S&P 500 is up a sizable amount for the year and the market seems to be optimistic towards to broader COVID recovery in the United States. One of the indicators for the prospects of the economy are jobs numbers, and March saw an explosive gain in jobs to the tune of 916,000 compared with expectations of 675,000. While it is important to remain skeptical, there are many barometers indicating that the US economy might be heating up. The broader question about jobs added, however, must take into account the quality of these new jobs.
The above chart details the composition of the new jobs added during March. The top category was “Leisure and Hospitality”, which was closely followed by “Government”. “Leisure and Hospitality” positions are generally cyclical in that they rise during periods of high growth and falter during recessions. These jobs also tend to be lower wage positions, and when combined with the “Government” jobs that were added tends to paint a less rosy picture than initially assumed when viewing the blowout jobs numbers.