Friday, November 6, 2015

The economy is performing well; good to know

New Employment Situation Report is out. Not bad, given the last couple of months. In October, total nonfarm payroll employment increased by 271,000 and the unemployment rate is at 5%.
The employment-population ratio, which seemed to start to inch up last year, however, now looks again stagnant. Even though it seems markets are happy with job creation above 200k per month, we need something more like 400 for a healthy recovery, and to bring the employment-population ratio up. Earnings have inched up a bit.

The danger here is that Yellen and the FOMC use this to really start hiking interest rates by December, after all she says she thinks "the economy is performing well." The question of course is for whom it's performing well.

2 comments:

  1. Not sure if the US has better job market now. Wages growth is good for sure, but when I looked at the numbers of payroll jobs I saw that the number of jobs created in 2014 between January and October was 2,364,000 jobs. For 2015 the number is 2,062,00. So far - judged by the first 10 months- 2014 beats 2015's by more than 10% of the total jobs created.

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  2. Hey Matias. Good stuff. I have this unusual hypothesis about Yellen, and the October jobs will provide a perfect test. Here it is: Yellen has been distracting the hawks with some variation of "We want to raise rates, but the data flows just do not support that this meeting. There is always next meeting." And that has been successful to date. My hypo is she does NOT want to raise rates, but has to game the hawks to get their votes. December should tell. (I have a pretty low prior on this, but it is intriguing to me). If so, she is pretty damn shrewd. If not (December rate rises), this is a typo instead of a hypo. Very best.

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