The US Bureau of Labor Statistics’ jobs report for May was the “biggest positive data shock” in US history.
Sunday, in a TV interview Mohamed El-Erian marveled at the Labor Department report of a lower-than-expected 13.3% unemployment rate.
“I was very surprised,” he said. “This will go down in history as the biggest positive data shock for the markets and the economy.”
“It is some combination of an incredibly resilient economy bouncing back, the impact of government measures including the Paycheck Protection Program and finally, maybe some data distortion, so we cannot figure it out yet, but it certainly is good news,” he added.
According to Mr. El-Erian, categorization issues may have led to the unemployment rate appearing lower than it actually.
“There is a category in there which says ‘staying at home for other reasons than unemployment,’” he noted.
“It is supposed to capture jury duty. That category has become really big, and if you adjust for it that is an additional 3 percentage points on the unemployment rate.”
He warned an increase in Black unemployment to 16.8% highlighted a “problem of inequality of opportunity.”
“The unemployment rate for Blacks shot up much faster than it did for Whites,” he said. “Last Friday’s data told us that while Whites got a very sharp reduction in the unemployment rate, the rate for Blacks went up.
Have a healthy week, Keep the Faith!