Where Are the Jobs--Part II?

 Financial FAQs

“Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024. While we've seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.” ADP

FREDpayrolls

The FRED (St. Louis Federal Reserve) graph tells it all. Job formation has almost disappeared in the Trump economy. It’s not only the shutdowns, which have delayed the official U.S. unemployment report that was due for January, but past months as well, so private payroll data processors like ADP fill in the knowledge gap.

But we know from the latest FRED graph of private payroll hiring that private employers are barely hiring. Just 74,000 jobs were created in November 2025 and 22,000 in January, as reported by ADP.

So the GDP growth spurts last fall 2025 are from the $ trillions being invested in AI energy centers, not in corporations expanding their workforce. Corporations are laying off workers instead.

The best examples are Amazon and now the Washington Post. The NYTimes just reported that the Washington Post told employees on Wednesday that it was beginning a widespread round of layoffs “that are expected to decimate the organization’s sports, local news and international coverage.

“The company is laying off about 30 percent of all its employees, according to two people with knowledge of the decision. That includes people on the business side and more than 300 of the roughly 800 journalists in the newsroom, the people said,” said the NYTimes

CBS News reports that in 2025, companies directly pointed to their use of AI in announcing 55,000 job cuts — more than 12 times the number of layoffs attributed to AI just two years earlier, according to outplacement firm Challenger, Gray and Christmas. Of those job losses, 51,000 were in tech, with most of the cuts concentrated in tech-heavy states such as California and Washington.

The main culprit are the tariffs that Trump is using to coerce concessions from foreign governments, but it is doing the most damage to Americans. U.S. vehicle sales plunged in January, for example. Automobile sales increased at an annual rate of 14.9 million in January, down 7% from 16.1 million in the final month of 2025, according to Wards Intelligence and profit losses of $billions have already been reported by GM and Ford due to the higher tariffs on aluminum and steel.

Consumers above all are reacting to the sudden changes in the employment picture. The Conference Board voiced their concerns in the headlineConfidence collapsed to lowest point since 2014, surpassing pandemic depths: “The Conference Board Consumer Confidence Index® fell by 9.7 points in January to 84.5 (1985=100), from an upwardly revised 94.2 in December. A 5.1-point upward revision to December’s reading of the Index resulted in a slight increase last month, reversing the initially reported decline. However, January’s preliminary results showed confidence resumed declining after a one-month uptick.

So unemployed workers are now suffering under both the rising inflation from the tariffs and AI replacing many of their jobs.

It’s not a pretty picture, while we are still waiting for the Supreme Court to rule on whether most of Trump’s tariffs are even legal. It much safer to do nothing in such circumstances—consumers to hold on to their savings and employers to replace their workers with more technology.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Too Few Jobs!

 

Financial FAQs

“The number of job openings was little changed at 7.1 million in November, the U.S. Bureau of Labor Statistics reported today. Over the month, hires were little changed and total separations were unchanged at 5.1 million each.” BLS.gov

CalculatedRisk

The Labor Department’s JOLTS survey is the first look at job formation before the official December U.S. unemployment report, and it isn’t pretty. The number of job hires equaled the number of ‘separations’, or those leaving the workforce for various reasons—voluntary or involuntary. 

(The blue line is Hires and red bars are Layoffs, Discharges, and other in the Calculate Risk graph. The black line is the total number of Job openings. It has fallen from its high of 12,000,000 job vacancies in 2022 after the COVID-19 pandemic.)

This means existing job positions are being replaced but no additional hires. Companies are holding on to their workforce, in other words, replacing those that are leaving for various reasons, but not expanding their workforce.

Trump’s Labor Department doesn’t tell us why but we can surmise that tariffs are the main culprit, since without the Supreme Court decision, companies don’t know if the existing so-called retaliatory tariffs enacted on April 2 are even legal. Imagine the refunds that the Trump administration has promised to return to importers if SCOTUS rules against him!

The number of hires decreased in state and local government, excluding education (-39,000) and in state and local government education (-31,000). Hires increased in federal government (+11,000), said the Bureau of Labor Statistics.

U.S. manufacturing activity fell to 47.9% in December, the Institute for Supply Management said Monday. This is the lowest reading of the year and the 10th straight month of contraction in the factory sector. Any number below 50% signals contraction.

“Looking at the manufacturing economy, 85 percent of the sector’s gross domestic product (GDP) contracted in December, compared to 58 percent in November, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI^® of 45 percent or lower) increased to 43 percent, compared to 39 percent in November,” said Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

ADP, a private payrolls purveyor, has said that just 41,000 jobs were added to payrolls in December. They were mostly in Leisure/hospitality and Education/healthcare, which means the service sector is still limping along.

This is in fact job stagnation, and with the manufacturing sector still in recession and inflation continuing to rise, it’s looking like overall economic stagflation is afoot.

How is a return of stagflation not inevitable with Republicans and Trump continuing to break up the existing world order? He has basically invaded Venezuela and threatened other countries with military intervention, how could it not be otherwise?

Who will want to do business with America at the point of a gun?

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Who Won the Shutdown?

 Financial FAQs

“What if conservatives succeeded in repealing Obamacare? “Republicans' Obamacare repeal bill would leave 17 million more people uninsured next year, and 32 million more in 2026, the Congressional Budget Office said in an estimate Wednesday. It also said premiums would double by 2026. …By 2026, three quarters of the population would live in areas with no insurers participating in the non-group market, due to upward pressure on premiums and downward pressure on enrollment, the report found.” Huffington Post

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Republicans didn’t win the recent government shutdown because they don’t understand how important affordable healthcare has become to all Americans, not just the wealthy.

They were in fact attempting to take down Obamacare (ACA) once again by not including the subsidies in the continuing resolution that made it available for middle and low-income folk.

Republicans have proven time and again that they want non-senior Americans to pay for health care out of their own pockets, if not through their employer or business. Their extreme dislike of the federal government providing any public healthcare is most evident in Trump picking a very demented RFK, Jr. to lead the Department of Health & Human Services, while slashing Medicare and Medicaid benefits.

It reveals why they are the party of wealthy oligarchs. They are not at all interested in the health of their constituents. It’s why Republican administrations have attempted to repeal Obamacare more than 30 times and why many of the Republican red states haven’t enlisted in the Obamacare premium subsidies that would enable their own citizens to afford Obamacare

So I cited above a CBO estimate from my 2017 Huffington Post article of the benefits to Americans’ health from Obamacare resulting from its passage.

A 2016 Commonwealth Club study said “…evidence indicates that the ACA has likely acted as an economic stimulus, in part by freeing up private and public resources for investment in jobs and production capacity. Moreover, the law’s payment and other cost-related reforms appear to have contributed to the marked slowdown in health spending growth seen in recent years.”

Some of those benefits are:

· Health care spending growth per person—both public and private—has slowed for five years.

· A number of ACA reforms, particularly related to Medicare, have likely contributed to the slowdown in health care spending growth by tightening provider payment rates and introducing incentives to reduce excess costs.

· Faster-than-expected economic growth and slower-than-expected health care spending have led to multiple downward revisions of the federal deficit and projected deficits.

· These trends have also been a boon to state and local government budgets, as job growth has improved state tax revenues while cost growth in health care programs has slowed. At the same time, expanding insurance to millions of people who were previously uninsured has supported local health systems and enhanced families’ ability to pay for necessities, including health care.

We now must wait for the November 20 release of the delayed September unemployment report to learn just how much the shutdown hurt the American economy.

But the almost complete ignorance of Obamacare’s importance by Republicans during the shutdown enabled Democrats’ big win in the November elections.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Are We in a Recession?

Financial FAQs

“The preliminary estimate of the Current Employment Statistics (CES) national benchmark revision to total nonfarm employment for March 2025 is -911,000 (-0.6 percent), the U.S. Bureau of Labor Statistics reported today. BLS.gov

FREDunemployment

There was a lot of consternation when the Bureau of Labor Statistics (BLS) reported that the economy created half as many new jobs from early 2024 to early 2025 in its national benchmark reassessment of the job market— amounting to about 71,000 new jobs a month instead of the previously reported 147,000, said MarketWatch’s Jeffry Bartash.

Did it mean the BLS doesn’t know what it is doing, and Trump was right to fire the BLS head because he didn’t like the numbers? No, but it does show the job slowdown began last fall during the Biden administration, not in January.

Why? Because the Federal Reserve had been holding their Fed Funds rate at 5.33% for too long, for more than one year until September 2024, before dropping it suddenly -0.5% to 4.83%, then two more times in November and December to 4.33%, where it’s been ever since.

The PCE inflation rate had fallen to 2 percent, so it looked like inflation had been conquered, and it was hurting consumer spending. Did the Fed see the possibility of a recession?

The National Bureau of Economic Research (NBER that calls recessions) put up the above FRED unemployment rate graph on its website as a simplified picture of what has happened to the unemployment rate during past recessions since 1980 (gray bars are recessions).

Past economic downturns seem to have begun when the unemployment rate rose to 5% and was as high as 10% during the 1981 and 2008 recessions and took months, even years in some cases, to end. The Great Recession of 2008-09 lasted more than 1.5 years, which made it the worst economic downturn since the Great Depression with the loss of nearly 8.9 million jobs, per the BLS.

COVID-19 was the exception to other recessions because the unemployment rate was already 3.5% when it hit and quickly returned to 3.5% when the pandemic ended, indicating the US economy was still fully employed and COVID-19 caused a temporary slowdown in growth. Since then, the unemployment rate has risen steadily to 4.3% in August.

This doesn’t really answer the recession question, since the NBER also looks at other economic numbers, such as real GDP (inflation adjusted), real personal income minus government transfers, real consumer spending, and industrial production, which are still growing, but for how much longer?

This is while the tariffs are in fact causing higher inflation. The BLS reported its Consumer Price Index is up to 2.9% annually from 2.3% in April before the tariffs kicked in, a sure sign that the tariffs have raised overall prices.

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in August, after rising 0.2 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.” BLS.gov

The financial markets rallied on the latest inflation news, apparently believing the Fed will finally begin to cut interest rates in September—for the first time since last December.

Lower interest rates are badly needed to counter the high tariff rates that are slowing economic growth, if SCOTUS allows them in Trump’s appeal. They are causing the loss of $trillions to the US auto makers. GM reports it will have lost $1trillion in profits this year if the tariffs remain.

But what if SCOTUS disallows them? The NYtimes cites Alex Durante, a senior economist at the Tax Foundation. “You would be doing a tax cut. You would be undoing a tax increase and you would provide relief to lots of businesses and consumers.”

Wouldn’t that be a better outcome? It would lower import costs and should mean lower prices overall.

We know that upcoming rate cuts by the Federal Reserve are now guaranteed even with the latest inflation reports because of the weak job numbers. This will surely spark higher near-term consumer spending and capital expenditures due to the reduction in borrowing costs, but for how long if the tariffs are allowed, as I said?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Fewer Jobs Available

 Financial FAQs

“It’s gotten harder for the unemployed to find work: Job openings in the U.S. fell at the end of 2024 to the second lowest level since the end of the pandemic.” MarketWatch

FREDjobopenings

Job vacancies reported by the Bureau of Labor Statistics have dropped from 8.2 million to 7.6 million openings in just one month. And this is becoming worrisome with the financial markets’ uncertainty over the effects of the federal government efficiency drive that President Trump is promising.

“It’s also taking people who lose a job a lot longer to find one. The number of people collecting unemployment benefits has risen to the highest level since 2018 if the pandemic years are omitted,” said Marketwatch.

This is having an impact on consumer confidence, needless to say, since consumers tend to become more cautious in their spending ways at such times. The Conference Board survey wasn’t upbeat.

“All five components of the Index deteriorated but consumers’ assessments of the present situation experienced the largest decline. Notably, views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row,” said its Chief Economist, Dana Peterson.

Why the doubts when the just elected Republicans are touting they can cure the budget deficit with a tariff war, which the Wall Street Journal just headlined was “The Dumbest Trade War in History.”

None of this is supposed to happen under the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and signed in his first term, according to WSJ’s Editorial Board.

“The U.S. willingness to ignore its treaty obligations, even with friends, won’t make other countries eager to do deals. Maybe Mr. Trump will claim victory and pull back if he wins some token concessions. But if a North American trade war persists, it will qualify as one of the dumbest in history,” says the WSJ.

Then there are the ongoing deportations which will hurt service industries like leisure, transportation, healthcare, and construction which employ a majority of immigrants, especially in the smaller businesses.

The number of job vacancies reported by companies was lowest after the 2008 Great Recession and began the steady climb to 7 million just before the COVID-19 pandemic 7.6 million job openings has stabilized over the past several months, indicating that the job market and so the unemployment report hasn’t changed. There were 5.5 million hires and 5.3 million separations (i.e., left their jobs), indicating that some 200,000 new jobs were created, which will be confirmed in Friday’s official unemployment report.

All three major stock market indexes have been seesawing since Trump enacted, then suspended the Mexican and Canadian tariffs, but not the Chinese 10% tariff. So, it is really up to the new administration to calm the markets, if they don’t want more investors to head for the exits.

And how will the threatened firing of FBI agents calm the waters? Who will then protect us from domestic and foreign terrorists?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Bidenomics Works--Part II

 Financial FAQs

A large fraction of voters do suffer from economic illiteracy. Indeed, it is fair to say that an ample majority do not understand the basics of how markets work. They are especially confused about labor and international markets. Voters also have severe misconceptions about how government spends their tax dollars, and are extraordinarily pessimistic about long-run economic conditions.” Professor Bryan Caplan of George Mason University, citing a recent Washington Post/ Henry J. Kaiser Family Foundation/ Harvard University Survey Project.

CalculatedRisk

“Job openings in the U.S. rose to a six-month high of 8.1 million in November from 7.8 million in the prior month, helped in part by a rebound in employment after two major hurricanes and the start of the holiday shopping season,” Jeffry Bartash, MarketWatch

Surveys such as the US Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) report as portrayed in the above graph are saying that consumers’ jobs are still safe. Then why so much angst that things might get worse? Polls seem to be buffeted by the latest political winds, especially with Trump’s repeated assertions that our economy is in terrible shape.

“Our Country is a disaster, a laughing stock all over the World!” he declared on social media last week, per NYTimes Peter Baker.

Yet we know that President Biden’s Bidenomics legislation has made us the fastest growing developed country in the world after the COVID-19 pandemic. We have been fully employed for more than two years, and inflation is back down to the 2 percent range.

Peter Baker added, “New data reported in the past few days indicate that murders are way down, illegal immigration at the southern border has fallen even below where it was when Mr. Trump left office and roaring stock markets finished their best two years in a quarter-century.

Polls have shown that this is because it’s easier to blame than understand what is happening to ordinary people’s financial circumstances. PEW Research has shown that although voters like their own situation, many believe the overall US economy is in the dumps; some even believing we are in a recession.

There are plenty of horror stories to encourage such a view, such as our national debt has ballooned to 121 percent of GDP, and we may soon lose our last Aaa bond rating.

But the latest economic facts are that both the service sector and manufacturing sectors of our economy are doing very well. Consumers are still powering travel, leisure activities, healthcare, and construction industries per the most recent Institute for Supply Management Service Sector survey. It’s headlines touted:

• Sharpest growth of output and new orders since March 2022
• Employment increases for first time in five months
• Business confidence at 18-month high

The ISM manufacturing survey showed similar but slower growth. “The overall economy continued in expansion for the 56th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.)

Because Americans get most of their news from public media that doesn’t make much of an effort to differentiate facts from fiction, truth from lies, it requires an effort to ferret out the difference. Propagandists know this as well, hence their nonstop efforts to repeat the fictions.

Harlan Green © 2024

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Confused Consumer

 Financial FAQs

The Conference Board’s index of consumer confidence sank to 98.7 this month from a revised 105.6 in August the Conference Board said Tuesday.

Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board…Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further.”

Conference Board

There are really too many ways to measure economic health, and consumers are prone to pick and choose their favorite economic subject—whether it is inflation, job conditions, or just general business conditions they hear about—hence their uncertainty.

Right now, consumers are worried about what will happen as a result of the Federal Reserve decision to finally cut interest rates after two years. The Fed’s decision is both a good and bad sign, It’s good because the cost of borrowing will now drop sharply based on loan rates—for housing as well as goods and services that depend on borrowed money.

The Bank Prime Loan Rate is 8.50%, which is why credit card rates have been above 20 percent for so long, and card rates could crop as low as 15% based on the Fed’s current projections, as I’ve said.

But it’s also a sign the Fed is worried that it waited too long. Fed Chair Powell in his remarks after the announcement of the recent -0.50% rate cut, said they probably would have begun the rate cuts in their July meeting; if they had known of the Labor Department downward revision to one year’s job totals—812,000 fewer jobs were created from April 2023 to March 2024.

Consumer confidence is also being affected by the Presidential election. The NY Times reports that Arizona voters in surveys see a completely different picture of the economy, based on their political affiliation.

When asked in a recent Times/Siena Poll if “the nation’s problems were so bad that it was in danger of failing,” 72 percent of Republicans agreed vs. just 16 percent of Democrats.

Wow, why such a difference? We know why MAGA Republicans want the reality to be apocalyptic—they should believe what Trump says not actual government data. That is what their propaganda is designed to do, and because the US economy is so diverse it works for those that want to hear bad news when actual facts are publicly available.

So why the pessimistic tilt in this poll? Consumers seem to be seeing what the Fed Governors are seeing, a growing unease over the job market. Though still at full employment, company hirings have slowed down.

“The deterioration across the Index’s main components likely reflected consumers concerns about the labor market and reactions to fewer hours, slower payroll increases, fewer job openings—even if the labor market remains quite healthy, with low unemployment, few layoffs and elevated wages,” said the Conference Board’s Peterson.

In actuality, hirings have slowed after two years of record job formation, and inflation is almost back to pre-pandemic levels. Yet the “Perceived Likelihood of a US Recession over the Next 12 Months ticked up in September but remained well below the May 2020 peak, per the poll.

So what are consumers to believe? My recommendation is use your common sense. Read reputable, widely available news sources. Ask how the company you work for is doing? The cost of things borrowed will come down, but inflation overall is back to its historical level of 2 percent; any lower than that and it would be signs of a looming recession.

We should be returning to a more normal economy with normal job creation, now that the two weakest legs of growth—manufacturing and housing—will begin to benefit from lower interest rates.

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why No Recession?

 Financial FAQs

I said last month we know why the US economy is still growing. Consumers keep spending, and the unemployment rate, though rising, is just 4.3 percent. The second revision of second quarter economic growth confirms this as well, jumping from 2.4 to a 3.0 percent growth rate.

But the downward revision of -818,000 nonfarm payroll jobs by the BLS from March 2023 to March 2024 showed not as many jobs were created as originally estimated, and it has begun to panic the financial markets.

And if consumers don’t keep spending where they spend the most—leisure and healthcare—what will keep US from a recession? It’s government spending via Bidenomics, President Biden’s legislation to modernize the economy. We should ignore the protests from conservatives of too much government spending and too much public debt for the moment. It’s what is keeping us at full employment.

Paul Krugman opined earlier in the year on the particulars of President Biden’s ‘New’ New Deal legislation, which is investing as much in the U.S. economy as Roosevelt’s New Deal.

“The fact, however, is that Biden has put in place a very ambitious agenda — major enhancements of Obamacare, student debt relief, big infrastructure spending, large-scale promotion of semiconductors and green energy that have led to a surge in manufacturing investment.”

FREDmanfacturing

It has led to a very big jump in Manufacturing investment, for starters, that is creating more high-paying jobs—800,000 manufacturing jobs to date. Although overall manufacturing activity has been shrinking per the latest surveys—even with investments in the construction of new Manufacturing facilities having soared from $78 billion in 2020 to $237 billion this July—it should means better days ahead for the manufacturing sector.

This is important because July’s BLS Job Openings and Labor Turnover Survey (JOLTS) report shows a weakening labor market. The number of job openings dropped to 7.7 million from its high of 11 million openings in 2022 as the economy rushed to recover from the COVID-19 pandemic. (That’s still a lot of jobs looking for workers.)

The number of job openings decreased in health care and social assistance (-187,000); state and local government, excluding education (-101,000); and transportation, warehousing, and utilities (-88,000). Job openings increased in professional and business services (+178,000) and in federal government (+28,000).

 BLS.gov

This is further evidence that growth will continue and perhaps keep consumers shopping for bargains, which is why inflation and rising prices should no longer be a problem, even as the Fed begins to cut interest rates this month.

Consumer confidence is rising again as well, which should help sustain the rally, as consumers seem to be worrying less about their job, per the Conference Board survey, even though personal savings have declined to dangerous lows.

“The Conference Board Consumer Confidence Index® rose in August to 103.3 (1985=100), from an upwardly revised 101.9 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 134.4 from 133.1 in July.”

So we still depend on consumers to carry most of the load to sustain the strong growth, but government has to give a hand to keep them “in the game,” as I’ve been saying.

We will know more come Friday’s unemployment report.

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

Higher Productivity Lowers Inflation

 Financial FAQs

Why has the Fed got it so wrong with inflation, even though the inflation rate has been falling steadily for more than a year?

Paul Krugman in a recent NYTimes Op-ed said the personal consumption expenditure deflator (PCE) excluding food and energy—the Fed’s preferred inflation indicator—has risen at an annual rate of only 2.5 percent over the past six months, down from 5.7 percent in March 2022. When food and energy prices are added it still rose just 2.5 percent.

Even U.S. unit labor costs were much weaker than initially thought in the third quarter amid surging labor productivity, which meant unit labor costs (i.e., wages) weren’t pushing inflation higher. So-called ‘sticky wages’ were the main reason the Fed kept saying inflation would remain high, hence their refusal to say when they would begin to drop interest rates.

The markets now believe it could begin as early as in May next year.

FREDproductivity

“Unit labor costs fell at a 1.2% annualized rate in the third quarter, the Labor Department's Bureau of Labor Statistics said, revised down from the previously reported 0.8% pace of decline. Unit labor costs rose at a 1.6% rate from a year ago, the smallest year-on-year increase since the second quarter of 2021.”

Slowing wage pressures were underscored by the ADP National Employment Report, which showed that private payrolls increased by just 103,000 jobs in November after rising 106,000 in October. ADP said almost all the new jobs were created in transportation, education, and health care.

There is another obscure economic statistic that can show a better next year. It’s the Labor Department’s JOLTS report that counts the number of job openings each month. The number of openings was sky-high after the COVID pandemic as evidenced by the black line in Calculated Risk’s graph because employers wanted to re-hire workers as the economy recovered so quickly.

Calculated Risk/BLS.gov

It has been steadily declining since then, as has the number of hires (blue line).

But the unemployment rate is still below 4 percent (currently 3.9%) and has been since December 2021. Americans are fully employed, and companies are wanting to hire more despite inflation and soaring interest rates.

“The number of job openings decreased to 8.7 million on the last business day of October, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations changed little at 5.9 million and 5.6 million, respectively. Within separations, quits (3.6 million) and layoffs and discharges (1.6 million) changed little.”

The difference between hires (5.9 million) and separations (5.6 million) in the JOLTS report means approximately 300,000 new jobs were created in November, changing little in the employment picture.

That should tell us there will be a strong November unemployment report on Friday, though slower GDP growth is forecast for the fourth quarter. Americans are experiencing an incredible recovery, fastest in the developed world, including China.

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Here's to a Return of Normal!

 Popular Economics Weekly

FREDretailsales

Is it possible after years of pandemic and post-pandemic vicissitudes, the US economy is returning to normal growth, and Americans can breathe easier about the future?

By that I mean consumers are shopping as they did before the pandemic, industries are producing enough to keep inflation in check, and supply-chains fully stocked, even if the Fed won’t begin to drop interest rates until next year.

I believe so, and July’s retail sales are confirming that consumers are healthy and behaving more normally now that the tax season is over.

It surprised some economists that advanced sales for retail and food services jumped 0.7 percent in July, and 3.2 percent over July 2022, as reported by the Census Bureau. But 3 to 6 percent annual sales’ growth has been the norm going back years, seasonally adjusted but not for inflation, per the FRED graph.

Dining out and travel were the biggest beneficiaries of consumers’ largesse. Sales rose a sharp 1.4 percent at bars and restaurants, a sign that they are happy. Internet sales have risen 10.3 percent over the past year, more than double the rate of inflation.

In fact, the so-called ‘new normal’ of post-pandemic activity is looking more and more like the old normal. Unemployment should stay low for the rest of this year, at least. There are still nine million open job vacancies and wages are now rising faster than overall inflation, which should keep economic growth above 2 percent, the average longer-term US growth rate.

Why is inflation slowing so quickly without rising employment? Many economists believed higher unemployment and job losses were needed to slow consumers spending sufficiently to bring down the inflation rate.

Economists such as Paul Krugman believe that might have occurred if inflation expectations had become imbedded—i.e., in the belief that inflation would continue higher for an extended period.

But economies have recovered much more quickly, thanks in large part to the $trillions spent on the pandemic recovery—the ‘new’ New Deal I’ve been talking about.

So, there wasn’t enough time for inflation to become ‘embedded’ (an economic term) in the minds and expectations of Americans. Other countries haven’t invested as much in their recoveries, so are experiencing higher inflation.

A report just out by the NY Fed confirms that inflation expectations are subsiding. The median inflation expectation fell to 3.5 percent in July from 3.8 percent the previous month, and is the lowest reading since April 2021, the report said.

Consumers also expect home-price growth to slow slightly, said the NY Fed. They also see the cost of gas, food, medical care, college, and rent fall in the year ahead. Expectations for food inflation are at the lowest level since September 2020 (5.2 percent).

Why shouldn’t consumers feel better about their future, and act accordingly?

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Still Many Job Openings!

 Financial FAQs

Calculated Risk Blog

It’s hard to reconcile the recent downgrade of US Treasury debt by Fitch Ratings, one of the three major debt rating agencies, to AA+ from AAA, with the US economy still at full employment.

“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” it said. “Several economic shocks” as well as tax cuts and new spending initiatives “have contributed to successive debt increases over the last decade,” reported MarketWatch on the downgrade.

The Bureau of Labor Statistics Job Opening and Labor Turnover Survey (JOLTS) reported an average of 5.9 million hires per month (blue line in graph), and total separations of 5.6 million, while the number of job openings has declined to 9.8 million range (black line).

That’s still a lot of job openings, mostly in government and services. Openings increased in health care and social assistance (+136,000) and in state and local government, excluding education (+62,000). Job openings decreased in transportation, warehousing, and utilities (-78,000), state and local government education (-29,000), and federal government (-21,000), said the Bureau of Labor Statistics press release.

Fitch maintained that “tighter” credit, weakening investment in business, and a “slowdown” in consumption “will push the U.S. economy into a mild recession” in the fourth quarter of this year and the first three months of next year, reported MarketWatch.

This is although most economists now see little danger of any recession at all; maybe just a ‘soft landing’ that slows economic growth once the Fed ends its interest rate hikes.

That doesn’t mean it hasn’t been a wild ride since the pandemic-induced disruptions.

The Calculated Risk graph tells the best tale of the pandemic—what our economy has endured from the effects of COVID-19. There were 13.406 million job layoffs and discharges in March 2020 (red bar spike in graph) during the nationwide shutdown when city streets emptied from the mandatory lock downs and home stays and wild animals roamed the streets.

It resulted in the shortest recession ever—just two months, April-May 2020—then economic growth suddenly reversed, and businesses hired 8 million workers (blue line) in the next couple of months.

The JOLTS report also tells us the difference between hires and total separations has averaged some 300,000 nonfarm payroll jobs, which approximates the average monthly job creations this year.

This is what Bidenomics is all about, the various aid programs and bills enacted by congress to modernize the US economy and reduce global warming. It has created something like six million jobs since President Biden took office, and maybe 3,600,000 more jobs this year.

It also tells us why the US economy continues to expand in all sectors—with consumers as well as in manufacturing. Consumers provided most of the 2.4 percent increase in Gross Domestic Product (GDP) in the ‘advance’ (first of three) estimates of second quarter economic growth.

This should confirm that no recession is imminent this year. Even if growth in Q3 and Q4 slowed, the overall year’s growth would still be positive.

Goldman Sachs chief economist, Jan Hatzius is one of the major economists who trimmed the probability of a recession in the next 12 months to 20 percent from 25 percent — well below the 54 percent median among forecasters who participated in the last Wall Street Journey survey.

“The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession,” said Hatzius.

And as I reported earlier, Federal Reserve Chair Powell said the Fed Governors now believe we can avoid a recession at Wednesday’s post-FOMC meeting, after announcing raising the benchmark interest rate to a range of 5.25 percent to 5.5 percent, the highest level in 22 years, in order to combat “elevated” inflation.

Consumers also like the continued growth, according to the Conference Board’s July Confidence Index that jumped from 110.1 to 117.

“Consumer confidence rose in July 2023 to its highest level since July 2021, reflecting pops in both current conditions and expectations,” said Dana Peterson, Chief Economist at The Conference Board. “Headline confidence appears to have broken out of the sideways trend that prevailed for much of the last year. Greater confidence was evident across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000.”

We should wait for Friday’s latest official unemployment report for the most recent unemployment picture, but it looks like Fitch Ratings is an outlier on the soundness of the US economy.

Harlan Green © 2023

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Is Job Market Still Too Hot?

 Financial FAQs

CalculatedRisk

No matter how hard it tries, the Fed hasn’t been able to slow hiring in the hopes that it will bring down inflation—because corporations have record profits and are only beginning to lay off workers.

But watch out this year as the $trillions in New Deal spending of bipartisan bills just passed is funding projects that need good jobs, such as the Infrastructure and Inflation Reduction Acts.

So what is the Fed to do, discourage the long overdue modernization of the American economy?

The Bureau of Labor Statistics JOLTS report showed 10.5 million job openings and was “little changed” from past months.The above graph shows job openings (black line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

“The number of job openings was little changed at 10.5 million on the last business day of November, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively. Within separations, quits (4.2 million) and layoffs and discharges (1.4 million) changed little.”

That means approximately 400,000 jobs were created in November—the difference between hires and total separations.

BusinessInsider

And here’s a graph once again of corporate profits that fell to their lows in the 1980s before soaring to new heights.

So this Friday’s unemployment report will be closely watched by Fed officials, with few giving any indication that they want to slow down their rate increases.

Minutes released Wednesday from the Fed’s Dec. 13-14 meeting showed the central bank’s policymaking arm recognizes that inflation has begun to cool somewhat but its participants still view price growth as “unacceptably high”.

Wow, this is while the overall picture is of a slowing economy, with the ISM’s manufacturing survey showing contraction. U.S. manufacturing activity slipped to 48.4 in December from 49 in the prior month, according to the Institute for Supply Management on Wednesday. This is the lowest level since May 2020.

And job layoffs have increased sharply before the holidays. The worker-friendly Guardian was not slow to react.

“After corporations complained of labor shortages through 2021 and 2022, several companies have shed workers in mass layoffs as 2022 comes to a close. Job cuts in the US have risen this year, with a 6% increase for the first 11 months of 2022 in comparison to last year.”

Consumers are already cutting back spending as retail inventories pile up and more stores begin to discount. That will become more serious now that the holidays are over. It would be nice if there was more consistency in federal policies!

So my answer is the job market is not too hot. Many more jobs will be needed to aid our economic recovery as well as modernize those regions that have fallen behind at a time when we need all Americans to participate in the recovery.

 

Harlan Green © 2022

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen