November Jobs Report Thread

There is both good news and bad news buried in the report.

Most often, too much attention is paid to the headline month on month numbers.

1)

2) In year over year terms, total nonfarm payrolls did not increase for the first time since the pandemic. Generally, this is a negative.
3) Under the hood, most of the decline was in the government sector so it makes more sense to look at private payrolls in this context.
4) Private payroll growth continues to increase but the gains are clearly slowing down - this is to be expected.
5) The troubling part of the report was the labor force participation rate which remains stubbornly low.

As @R_Perli highlighted, if the LFPR does not increase back to pre-COVID levels, we're going to struggle with weaker trend potential growth.

https://t.co/zw7fCZ2gfY
6) These long-term trends are already quite troubling.
7) Similarly, the employment to population ratio is a disaster and will also weigh on both wage inflation and trend potential growth.

This is a structural issue and not totally related to demographics either.
8) Permanent job losses are still increasing, but slower which is good.
9) The growth rate in weekly hours for the manufacturing sector dipped slightly. Still a positive trend.
10) Coupled with a rising growth rate in the ISM new orders to inventory spread, manufacturing likely has legs through the new year and possibly through Q1.
11) Like @GreekFire23 wrote, after a major recession we get a snapback (Zarnowitz Rule) but growth quickly reverts to trend after the rebound.

https://t.co/Lxn4g7VyLh
12) The problem is that our trend is not good & getting worse

We have a growth upturn at the moment so we can ignore the LT trend, but only temporarily.

End.
@threadreaderapp
@threadreaderapp unroll

More from Economy

The argument for deficits & debt raising interest rates in the US is not increased credit risk, it is that interest rates are a function of economic fundamentals, flows & policy. Deficits/debt change those.

I can't tell if I'm agreeing or disagreeing with @jc_econ.


Increasing government spending or reducing taxes increases demand (or reduces saving). This raises the price of loanable funds or the interest rate.

In a dynamic context, more demand means a stronger economy, the central bank raises interest rates sooner, and long rates rise.

(As an aside, we are not close to the United States needing to worry about credit risk and the risks are more overstated than understated in most other advanced economies too. But credit risk is not always & everywhere irrelevant, just look at the UK in 1976 or Canada in 1994.)

Interest rates have fallen over the last 20 yrs while debt has risen. This does not necessarily mean that debt rising causes interest rates to fall. It could also mean that other things have happened at he same time that pushed down interest rates more than debt pushed them up.

The suspects for these "other things" include slower productivity growth, slower popln growth, higher inequality, less investment, etc. All of which either increase the supply of saving or reduce the demand for investment, reducing the equilibrium interest rate.

You May Also Like