Friday, December 8, 2017

No jobs boom yet, but...

The November jobs data were slightly better than expected (+221K vs. +195K), but from a big-picture perspective, jobs growth remains at best moderate. Private sector jobs, the ones that count, are increasing at a 1.6-1.7% annual rate, as they have been for most of the past year. Ho-hum. However, small business optimism looks strong, particularly in regard to future hiring plans. Small businesses are almost sure to be the main engine of jobs growth going forward, so this is very good news.

Chart #1

 Chart #2

As Charts #1 and #2 show, there hasn't been any change in the underlying rate of growth of private sector jobs for most of the past year. Indeed, the pace of hiring this year has been slower than it was in prior years.

 Chart #3

However, there has been a significant improvement among small business owners, as Chart #3 shows. An index of future hiring plans in November posted its strongest reading in the 44-year history of the survey. This suggests that Trump's efforts to reduce regulatory burdens, coupled with a strong expectation of reduced future tax burdens, have already produced positive results.

As I mentioned earlier this week, though, the market has still not priced in a stronger economy. Optimism is building, but the market is still in a "show-me" frame of mind.

UPDATE: Today (Dec. 12, '17) the overall Small Business Optimism Index was released, and it was also impressive, surging to a level that is just shy of that which occurred at the dawn of the boom years which followed the Reagan tax cuts:


steve said...

Scott, if you are right about this-and you very well may be, you should get some sort of "retired guy" economic award. The next year will be VERY interesting.

ps I will not bet against you...

Benjamin Cole said...

You gotta love that Chart #3. Let us hope it is serious signal!

There would be nothing better for America than a long decade of boom times and tight job markets.

And much more housing construction along the West Coast!

WealthMony said...

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And to you and all of them I wish a Merry Christmas & Holidays and a prosperous New Year!

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