Making sense of conflicting news on the labor market ๐ค
Some eye-catching news and helpful charts from the past few days ๐

Thereโs been a confusing mix of good news and bad news about the U.S. labor market in recent weeks.
On one hand, weโre seeing numerous anecdotes about layoffs at high-profile tech companies, which have been covered aggressively by mainstream media outlets.
On the other hand, the hard aggregate data continues to say net job creation is high, unemployment is low, job openings remain abundant, and layoff activity at the national level โ believe it or not โ remains historically low.
While anecdotes may tell us something about whatโs going on beneath the surface of the economy, they donโt always reflect the truth about whatโs going on at the national level. [For more on this, read: โMind the anecdata ๐ค.โ]
Over the past few days, weโve gotten some interesting news and some fascinating charts that help us understand the complicated state of the labor market.
The first chart comes from the brilliant Michael McDonough, chief economist for Bloomberg Financial Products (via Bloombergโs Joe Weisenthal and Tracy Alloway). It shows the number of mentions across S&P 500 company transcripts related to โjob cuts.โ

While there has recently been an uptick in companies discussing job cuts, it was actually higher during many other periods in the 2010s when the economy was booming and claims for unemployment insurance (red line) remained low. In other words, thereโs a lot of talk, but little evidence of significant action.
McDonough shared a second illuminating chart showing when during these calls โjob cutโ discussions occurred. As you can see, most are currently occurring during the Q&A with analysts (blue), not during prepared remarks at the start of calls (orange).

This suggests most discussions about โjob cutsโ occur because they are prompted by analysts, not management. Hereโs a hypothetical exchange:
Analyst: Weโre seeing more job cut announcements in industries you serve and vendors that serve you. Are you planning any job cuts?
Management: We are not expecting to make any job cuts at this time.
This is tantamount to an objectionable leading question. But itโs just the analysts doing their jobs.
This behavior is similar to media outlets just doing their jobs when they cover layoffs. This is what readers are interested in. But itโs not necessarily a reflection of whatโs going on in the broader economy. [For more, read: โBeware alarming business stories that get a lot of news coverage ๐๏ธโ]
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