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The US economy added 379,000 jobs in February, and the unemployment rate dropped to 6.2%.
But that good news hides just how much the labor market is really struggling.
Nick Buffie is an economic-policy analyst and graduate of the Harvard Kennedy School.
This is an opinion column. The thoughts expressed are those of the author.
On Friday morning, the Bureau of Labor Statistics released its February jobs report. Over the coming days, the media will likely focus on two statistics: the unemployment rate (which fell to 6.2%) and the number of jobs created (379,000), both of which were better than economists expectations. But despite the focus on these numbers, both measures greatly overstate the strength of America s labor market.
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The US economy will experience stellar growth in 2021 as the COVID-19 pandemic subsides, Bank of America said in a note on Monday.
The bank increased its 2021 US GDP growth estimate to 6.5% from 6.0% as it has become more convinced that the consumer will get out and spend this year, the note said. The bank also sees heightened economic growth extending into next year, bumping its 2022 GDP growth estimate to 5.0% from 4.5%.
Here are the three reasons guiding Bank of America s decision to increase its economic growth forecast, according to the note.
1. A larger fiscal stimulus package.
Congressional Democrats are pushing for a $1.9 trillion stimulus package that is scheduled to be voted on next month. But there is still work to be done on the bill, and some provisions proposed in the legislation will hit road blocks, BofA said.
Markets have been in a deflationary environment since the 2009 global financial crisis.
Inflation expectations are picking up, with the US breakeven inflation rate up 2.25% this week.
These are some of the material changes in markets investors need to know, Goldman Sachs says.
Inflation is heating up for the first time in a long time which should largely boost equities, but could have a sting in its tail for those who ignore the changes it could bring.
After 2020 s event-driven recession , there is a bull market underway across equities and the psychology behind it is one in which investors are moving out of the hope phase into the longer growth phase, according to Goldman Sachs, and this suggests a possible inflection point towards a more reflationary environment.
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President-elect Biden and the Democrats may be secured a majority in congress, but the razor-thin margins limit what they can do.
Investors expect further stimulus aiding growth, and steepening the treasury curve.
Value assets and the financial sector offer good opportunities, according to Morgan Stanley and Rathbones.
Risks remain for markets, including inflation and regulation.
Last week, President-elect Joe Biden and the Democrat party sealed a majority Government, flipping two Georgia Senate seats blue.
Markets largely reacted positively, despite a small decline in Big Tech stocks, with the Dow Jones hitting a record high, and a sell-off in Treasuries as investors forecasted a boosted economic growth.