Posts
This morning the market was apparently surprised by a stronger-than-expected jobs number. Private payrolls rose by 223K in September, vs. an expected gain of 125K. Some called it a "monster" number. From my perspective, however, nothing changed at all. Private sector jobs are growing by about 1.3 to 1.4% per year, as they have been for the past several months. This is moderate growth, probably enough to deliver overall economic growth of 2% per year or so. A nothing-burger.
Chart #1
There is nothing in today's report that should influence the Fed to change course. Inflation is yesterday's problem, and jobs growth is moderate. Lower interest rates are appropriate.
8 comments:
The usually monthly economic stats are not as precise as the public would like to believe. I think the experts (even the media?) know this, but almost never emphasize this. The recent revision of the employment stats are a case in point. The revision of about 800,000 jobs (downward) represents less than 1% of the total number of jobs being measured in the economy, so put another way, the data were about 99% correct.(!). A couple of years ago, I believe they revised these a similar amount upward.
When the economy is as mediocre as it has mostly been for at least a couple of decades, there is a lot of conflict about every little blip in the data.
The US economy has been in a very shallow but long lasting manufacturing recession for at least 2 years. It was in a similar situation in ~2016. In my opinion manufacturing is the most important part of the economy.
Lower rates are called for, but because of the previous 10-20 years of policy errors, big distortions remain in the economy, such as real estate prices.
Thanks for the post.
Great post. As with all things when viewed through the markets prism it is relative to expectations. This outcome was outside of the bounds of any of the economists in the data surveys and shows an abrupt changed in the loosening labor market trend from the prior two reports.
Through this lens, it was a 'monster' number relative to the consensus. As you mention, this may not have changed the changed the direction of Fed policy, but it has certainly caused a rethink on (i) where the final destination for rates is and (ii) on the speed in which we get there.
The fact that the 6-mo. annualized and year over year change in private sector employment was unchanged for the past few months (as the chart and commentary shows) can only be due to the fact that an equivalent “large” number occurred 7 and 13 months ago and then dropped out of the comparison. In other words, misses of this size, though they are surprising, happen all the time. It is beyond foolish to give much weight to one month’s numbers.
Anyone who trusts employment and jobs data from The Biden Administration in the month before an election (or ever) is a gullible person. The payroll jobs number was originally overstated by 43% from March 2023 to March 2024 AFTER two revisions.
The unemployment rate in August was reduced entirely by a very suspicious record increase of government employee (+785,000 in one month) after seasonal adjustmets. .
I don't think all the hoopla about the employment numbers was what drove the bond market's yields higher. The 24 month rate-of-change in monetary flows, the volume and velocity of money, the proxy for inflation, reversed in August.
Hello Salmo, are this data publicly available?
Some have reported that government employment jumped in the latest job numbers, but not private-sector jobs.
A lot of inflation today is caused by chronic housing shortages.
Americans need to learn to without property zoning, and go to free markets.
A tighter Fed does not increase the supply of housing.
Interest Rates: Long Bonds
Since Fed Funds cut, long rates have risen (!) almost 0.50%. I don't think this is what the powers that be had in mind.
The market it smelling more inflation?
This will not be good for the economy...
Post a Comment