You Can’t Separate the Unemployment Report From the Virus and the Border

Jobs are created the fastest where they’re destroyed the fastest. Basic stuff. Americans work in incredibly dynamic fashion precisely because they work in a country where the nature of the work in the present and future is very different from the past.

Keep this in mind with the employment report in mind. The capital markets are exponentially more powerful than the Fed, and if investors decide the U.S. is a wise place to park precious resources, no amount of Fed attempts at nonsensical notions like “soft landing” and “pain” will reveal themselves. The Fed is a legend in its own mind, along with the simple minds of economists and pundits, while investors continue to search for the enterprising.

It should be added that pundits and economists don’t even realistically understand what the “recession” is that they’ve been predicting for so long. Recessions are signals of recovery on the way. They’re a cleansing. They happen naturally every second of every day to the individuals and businesses that comprise the economy, and who willingly or reluctantly rush to realize errors. The Fed can’t induce recessions because we’re not a centrally-planned economy, plus Fed officials aren’t smart enough to induce what is healthy as is.

Still, there’s something to consider with the seemingly robust employment report. It signals more than the happy truth that the U.S. is wildly prosperous.

It helps explain what’s happening beyond an “employment situation” divined by individuals in government who’ve never met a payroll. We implicitly know what it is: the mindless lockdowns foisted on the U.S. economy by panicky politicians resulted in an enormous reshuffling of workers.

Wrecked as the economy was by the deep-freeze engineered by politicians who actually thought economic contraction was the answer to a virus, Americans did as they always do once they were given their freedom back: they started working again. The problem was that millions of displaced workers didn’t necessarily return to the work that was taken from them.

We see this now as all manner of service businesses remain understaffed, and whole portions of service businesses aren’t in operation due to a lack of workers. The “labor shortage” born of lockdowns is pretty easy to understand, particularly in the service sector. Really, would you eagerly take your talents back to a sector that politicians can so obnoxiously shut down so quickly?

Which means actual businesses operating in the real world are still working to solve problems created for them by the takers in government, and it’s proving costly. Call the latter a market signal. The U.S. combines relentless dynamism with businesses nationwide still trying to staff up after losing the abundant human capital in their employ before politicians panicked.

Notable about the panic is that in 2020, it revealed itself in empty borders. Hopefully the latter is a statement of the obvious. When tens of millions of jobs were destroyed and millions of businesses impaired, there was no reason for the tired and hungry south of the U.S. to migrate north. Now there is. Where jobs are destroyed rapidly they’re once again created with great rapidity. Combine the latter with the shortages across the service sector more broadly…

So there you have it. Humans migrate to opportunity, and the U.S. is the land of it. The border is the signal of this truth; the chaos a logical result of politicians trying to centrally plan what is a market phenomenon. Markets always speak, and they’re speaking now down south. 

Republished from RealClearMarkets


  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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