Weekly Market Commentary

May 11, 2021

The Markets

Economists estimated 975,000 new jobs would be created in April. The United States Bureau of Labor Statistics (BLS) reported there were just 266,000. That’s a big miss.

Economists, analysts, and the media offered a wealth of theories to explain the shortfall. These included:

  • Pandemic fear. A March U.S. Census survey found 4.2 million people aren’t working because they fear getting or spreading the coronavirus. That’s more than half of the 8.2 million non-farm jobs that need to be recovered to reach pre-pandemic employment levels.
  • Too-generous unemployment benefits. Another theory is federal unemployment benefits ($300 a week) have created a labor shortage. The theory is being tested. Last week, Montana announced it will no longer participate in federal unemployment programs. Instead, it will offer a $1,200 return-to-work bonus.
  • Low pay. Some say Americans are less willing to work for low pay than they were before the pandemic. Christopher Rugaber of the AP interviewed a Texas staffing office manager who reported job seekers are turning down jobs that pay less than unemployment benefits.
  • Lack of childcare. Many women who want to work left jobs during the pandemic to care for children. The April employment report showed a slight decrease in the rate of unemployment for adult women; however, it resulted from women giving up on job searches rather than finding work.
  • Rethinking work. “There is also growing evidence – both anecdotal and in surveys – that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic psychological effect on workers, and people are reassessing what they want to do and how they want to work, whether in an office, at home, or some hybrid combination,” reported The Washington Post.

Check out the big brain on Brett! There is a long-standing scientific theory about the size of a mammal’s body relative to its brain offers an indication of intelligence. The findings of a recent study seem to debunk that idea, reported Science Daily.

An international team of scientists investigated how the brain and body sizes of 1,400 living and extinct mammals evolved over time. They made several discoveries. One was significant changes in brain size happened after two cataclysmic events in Earth’s history: a mass extinction and a climatic transition.

Not every mammal changed in the same ways. Elephants increased body and brain size. Dolphins and humans decreased body size and increased brain size. California sea lions increased body size without comparable increases in brain size. All have high intelligence.

Of course, intelligence doesn’t always translate into wise behavior.

Studies of behavioral finance have found the human brain is more interested in survival than saving. “It turns out that, when it comes to money matters, we are wired to do it all wrong. Our brains have evolved over thousands of years to focus on short-term survival in a dangerous world with limited resources. They were not designed for today’s optimal financial behaviors,” wrote financial psychologist Dr. Brad Klontz, a CNBC contributor.

No one knows how the COVID-19 pandemic will be remembered over time, but it appears to have influenced the way people think about money in some significant ways. An April 2021 Bank of America survey reported:

  • 81 percent of participants saved money, that would normally be spent on entertainment, dining, and travel, and set it aside in emergency, savings, and other types of accounts.
  • 46 percent used pandemic downtime to put their finances in order.
  • 44 percent said their risk tolerance changed: 23 percent became more aggressive and 21 percent more cautious.

If the pandemic has changed your thinking, let’s do a review your accounts and discuss your current circumstances and thinking.

Focus On The Positive

“It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.”

–Richard P. Feynman, Theoretical physicist