You should not be surprised by the strength of the labor market 💪
The data has been telling us the truth all along 💡
The U.S. economy added a whopping 517,000 jobs in January, according to Bureau of Labor Statistics data released Friday. This was the largest monthly gain since last July.
The unemployment rate fell to 3.4%, the lowest level since early 1969.
On Thursday, we learned weekly initial claims for unemployment insurance fell to 183,000 during the week ending January 28, the lowest print since April.
You’re likely to come across a lot of headlines today about how the jobs report blew away expectations for a much more modest outcome. Fair enough. It’s incredibly difficult to forecast the short-term machinations in a labor market with 155 million payrolls.
However, the bottom line is the data overwhelmingly has been telling us the labor market continues to be very strong with lots of demand for workers. This, despite countless headlines about how prominent companies have been announcing big layoffs.
There’s not much more for me to add that hasn’t already been addressed in TKer. So I’ll refer you to some recent issues:
That's a lot of hiring 🍾: U.S. employers hired 6.2 million people in December, according to Bureau of Labor Statistics data. That same month, employers laid off 1.5 million. That’s right. Despite the many news headlines about layoffs at high-profile companies, there are many more people getting hired.
Making sense of conflicting news on the labor market 🤔: 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 remained low. In other words, there’s a lot of talk, but little evidence of significant action.
9 reasons to be optimistic about the economy and markets 💪: Most experts appear to be pretty bearish about the stock market and the economy right now, with many expecting an economic downturn to lead to deteriorating earnings, which in turn could be bad for stock prices. This sentiment can largely be explained by the fact that inflation remains troublingly high, which suggests we’ll have a protracted period of tight monetary policy. But economic and earnings recessions are not sure things. And there are plenty of reasons to believe that any downturn would be mild.
Beware alarming business stories that get a lot of news coverage 🗞️: Just because a story gets a lot of news coverage doesn’t necessarily mean it’s representative of what’s going on in the world. This is an issue with news, a business that’s incentivized to address its audience’s interests and not necessarily its needs.
How job openings explain everything in the economy and the markets right now 📋: The number of job openings in the U.S. remains very high. This single metric helps explain everything that’s happening in the markets and the economy right now.
Don't be misled by no-context reports of big tech layoffs 🤨: It’s fair to say that the market for tech jobs is experiencing hiccups. However, tech represents a very small share of total employment in the U.S.
The bullish 'goldilocks' soft landing scenario that everyone wants 😀 : Measures of inflation continue to cool, even as key economic activity metrics hold up. This is great news: It increases the likelihood the inflation crisis will come to an end without the economy having to spiral into a recession (i.e., the hard-landing scenario).