In 2023, "gold standard report" says Wisconsin trailed US for jobs. But still beats Trump years

The Bureau of Labor Statistics just came out with their latest update of the "gold standard" report for job growth - the Quarterly Census of Employment and Wages (QCEW). It's also intriguing since this carries through to the end of calendar year 2023.

Wisconsin continued its recent trend of being middle-of-the-pack for the Midwest, but also below the trend of much of the 2010s, and trailing the US average. In this case, Wisconsin landed in 41st place for overall job growth, at 1.04%, but also exceeded most of our Midwestern neighbors in the process.

Job growth, QCEW 2023
Mich +1.25%
Minn +1.23%
Ohio +1.15%
Wis. +1.04%
Iowa +0.95%
Ind. +0.94%
Ill. +0.81%

But even with a notable dropoff in job growth compared to 2021 and 2022, 2023's job growth in Wisconsin still beat each of the last 3 years of the Trump presidency, as well as 2 of the last 3 years of the Walker regime.

One area where Wisconsin beat the national average in the QCEW was in the rate of growth for average weekly wages. That rose by 3.9% in Wisconsin in 2023 compared to 3.6% in the US as a whole. However, we still fell further behind the national average in total dollars, as we ended 2022 at $198 behind the US average, and ended up $202 behind the average in 2023. So kind of a mixed picture there, but it does mean we saw solid job and wage gains for 2023 in Wisconsin, which is pretty good when you consider the state started 2023 with an unemployment rate of 2.7%, which indicates there wasn't much available labor to start with.

While unemployment rose from 2.7% to 3.4% in the state for 2023, that's a reflection of an increased labor force of 55,000 in the state, which solved some of the capacity issues we may have had. And since then, unemployment has gone back down in 2024, currently sitting at 2.9%. Not a bad place to be at, and I am intrigued in seeing if the future QCEW reports match the monthly numbers in showing job growth bumping back up for this year.

Wis still has $3 billion to play with, but number is slowly decreasing

Late last week, the Wisconsin Department of Revenue released the always-important revenue figures for April, which reflects payments from tax filing season. Along with the April revenue figures, the Legislative Fiscal Bureau released updated estimates of how the 2023-25 budget will end up.

As Emilee Fannon and JR Ross ran down on Wiseye, things are still on track for what has been projected.

As Ross mentions, there is still projected to be a sizable amount of money in the state's bank account as the biennium ends in 13 months - over $3.1 billion. There is slightly less to play with in the "structural" outlook for the next budget, largely due to an increase in the state's child care tax credit that Governor Evers signed in March.

That was in the same set of actions where Evers vetoed income GOP-backed tax cuts on regular and retirement income, as well as an increase in the state's married couple credit, and Evers rightfully claimed backing all the tax cuts would have thrown the next budget into a deficit.

So we are still in a spot where we have a big enough surplus to do give some strong one-time moves, or have moderate levels of increased aid and services (such as following Evers' budget request to increase K-12 special education aids to 60% coverage, which would be somewhere around $450 million a year, and also could reduce the need for districts to raise property taxes through referendum).

But the cushion isn't so big that we can have multi-billion dollar tax cuts that stay in effect year after year. These numbers show that we are already projected to spend more than we take in for the next 3 fiscal years without additional tax cuts, so why would we want to make that into a much larger long-term problem with tax giveaways?

Dane Co keeps getting the most people, but quite a few headed up North to live in 2023

The US Census Bureau had its updated release of populations for all counties, cities, villages and towns come out this month. At the county level, Dane County continues to be the biggest gainer since the 2020 Census, with a population increase of more than 13,800, a number more than 8,000 above than the second-largest growth in a Wis county (Waukesha).

But on a percentage basis, Dane County only has the 8th-fastest increase of all Wisconsin counties. It is mostly rural counties in northern and central Wisconsin that have had the biggest jumps in the 2020s, along with the continually-growing Twin Cities exurbs of Saint Croix County, and the next county north of Milwaukee.

I was going to go into some of the reasons why, but then Marquette University's John Johnson had this excellent breakdown at the Recombobulation Area, and I'll just defer to his analysis.

Johnson looked at Wisconsin as well as 5 other Midwestern states, and notes that our state has overcome unfavorable age demographics by attracting people with migration, helping our population grow by more than 17,000 people in the first 3 years of the decade. As you can see, only Indiana has fared better for net migration in that time period, while Minnesota benefits from favorable demographics. Meanwhile, Illinois continues to lose large numbers of people to other states and places.

Johnson goes on to look at each county in the Midwest under the metrics of migration and "natural change" (births vs deaths). And it tells an interesting story as to what happened in 2023 among different places. For example, the Wisconsin places that had "double-positive" trends in migration and more births than deaths include Dane County, the Green Bay,Appleton, and Oshkosh metro areas, and Eau Claire County. The Twin Cities suburbs also had strong growth due to these trends (both in Minnesota and Wisconsin), as do the counties surrounding Indianapolis, Indiana.

On the flip side, look at how many counties in rural Iowa and Illinois are "double-losers". And how Northern Minnesota also had several double-loser counties, but Northern Wisconsin did not.

I also wanted to go into this map, which shows the counties that had good demographics, but had more people moving out, so they lost population last year. Wisconsin only had 3 counties in this group, but it includes Milwaukee County (down another 1,873 in 2023) and Kenosha County. You'll also see that the Chicago area is in this list, as are the counties that include Indy, Detroit and St. Paul.

The last group includes Midwest counties with more deaths than births. In Wisconsin, Minnesota, Michigan and Indiana, many of these places had more people moving in to overcome those lost through bad demographics. This is especially true in Wisconsin, and that's reflected in the high % of growth in many 715 counties last year, and also in the continued growth of the WOW Counties. But in downstate Illinois and a segment of northern Indiana, there are several counties whose demographics were so bad that not even being a gainer of migration kept them from losing people in 2023.

Lots to crunch there, but the successes of Wisconsin in gaining people in 2023 despite unfavorable demographics in many areas of the state should be something we take note of. You also can see how a lot of the WOW Counties are having older people dying off, and being replaced by people coming in from Milwaukee and other areas. And Dane County continues to lead the way, with good trends in both migration and demographics.

I do think some of these changes have yet to be accounted for when we look at the 2024 electorate, and few of those outcomes are good for the Wisconsin GOP, unless the movers to Northern Wisconsin are doing so for culturally conservative reasons and not because they are more liberally-minded voters that enjoy the natural beauty and outdoorsy lifestyle (a trend that I think is a big reason why Door County has become blue-leaning).

As Marquette's Johnson summarizes in his post

By comparing Wisconsin with this set of neighboring states, I hope to better place our demographic situation in context. The bright spots in Wisconsin extend well beyond Madison. Many regions surrounding smaller cities like Eau Claire, Wausau, and the Fox Valley are doing quite well. The rural Northwoods is attracting enough migration to offset the natural decline of its aging population. Our rural communities are in a much healthier place than those of Illinois or Iowa.

Still, even if Wisconsin’s outlook seems better than Illinois’, Milwaukee nonetheless appears to be on the same trajectory as Chicago. In both, the population has fallen by about 3% since the pandemic began. The culprit is the same. The birth rate in each city is positive, but more people choose to move away than to move in.

Jake's power has been restored

Weird week here, partly due to my real job being busy, but also because I was one of the 1% of Madison Gas and Electric customers that was without power from Tuesday night until midday Saturday.

Now we were able to save most of our food and the temperate climate of the week kept things from being too uncomfortable at home, but it made it near-impossible to post from home or do anything else with the ole laptop.

Some things left to catch up on (the economy still good, people still not connecting their reality to the country's reality), but that'll be brought up in due time.

Fund special ed just like we would for vouchers, and stop all those annoying referenda!

If you're annoyed by the prospect of having to deal with referenda to keep your community's public schools afloat, State Sen. Chris Larson recently brought up a way that could avoid some of those ballot questions. Why not have the state pay more for special ed, and lower your district's property taxes in the process?

Larson, a Democrat from Milwaukee, called on Republican lawmakers to convene a special session to use some of the state's budget surplus to raise state reimbursement of special education costs to 90%. A Legislative Fiscal Bureau memo requested by Larson showed the move could cost about $970 million annually, if costs next year are similar to this year.

Republicans previously rejected calls to raise the reimbursement rate. Gov. Tony Evers had proposed raising the rate to 60%, after calls for an increase from a broad coalition of business executives, public school leaders and private school leaders. Republicans walked it back to 33%, a slight increase from the previous rate of 30%.

That leaves districts on the hook to cover the rest of their costs. Most districts had to pull between $1,000 and $2,000 in regular education funding for each district student to cover special education services in the 2019-20 school year, according to a report by the Education Law Center, a New Jersey-based nonprofit that advocates for equitable school funding.

In addition, previous studies have shown that many higher-poverty districts have higher percentages of students in need of special education than schools in more affluent district, which furthers constrains resources for those often higher-cost services. For example, the Education Law Center noticed that Milwaukee Public Schools have to deal with higher burdens from special education services than the North Shore suburb of Whitefish Bay does.

The special education reimbursement shortfalls tend to be highest for districts with higher rates of poverty, an analysis by the Education Law Center found, as those districts have higher numbers of students with disabilities who need special education services....

[For example], in the 2019-20 school year, 84% of MPS students qualified as low income, and 20% were identified as having disabilities. In Whitefish Bay, 2% of students were low income, and 11% had disabilities. MPS had to use about $2,000 of its general funding per student to cover special education costs, while Whitefish Bay had to pull about $1,100 per student.

Larson then combined the two concepts and noted that if the state funded 90% of those special ed costs, there would be a much lower need for referenda, because schools wouldn't need to use as much of their "regular" property-tax supported funding to pay for special ed.

Unreimbursed special education costs were equivalent to 63.8% of the annual dollars sought via operating referendum in those 68 districts.

In 16 districts, unreimbursed special education costs accounted for 100% or more of the annual operating referendum amount

Two-thirds of districts with operating referenda had unreimbursed special education costs equivalent to at least half of the annual referendum amount

57.0% of the recently-passed Milwaukee Public Schools referendum ($143.5 million out of $252 million) can be attributed to unreimbursed special education costs.

Another reason Larson chose the 90% reimbursement figure is that it's the same percentage as voucher schools get for their special needs scholarships that go to students with special needs that attend those voucher schools. This costs of this state-funded program for voucher schools has risen substantially since it became law in 2017, including an increase of more than 50% in funding for this current school year.

So if it's good enough to raise funding for voucher school special ed, why wouldn't it be good enough for the rest of the state? Or at least give each school the $15,000+ per special education student in state funding that voucher schools get under the special needs scholarship.

It's yet another example of how 14 years of GOP favortism towards voucher schools have hurt our community schools and the students and parents who rely on them, and led to higher property taxes for all of us. And it's yet another thing that has to be fixed when we get new legislators and fair maps in place for the next session.

Surprise! CBO says Americans have been beating inflation

You’ve probably heard a ton about how “inflation is eroding wages and standard of living!” And many Americans are understandably frustrated in seeing more of their after-tax income going to pay for food and rents and other expenses.

But the Congressional Budget Office took a longer-range view, back before the COVID pandemic hit the country. And know what they found out? That all American income groups paid less of their incomes for everyday items last year than they did in the Trump presidency.

CBO used 2019 consumption bundles to assess changes in the prices of goods and services commonly consumed by households. To assess the effects of inflation on households at different income levels, CBO estimated the change in the share of income required to purchase the 2019 consumption bundle for each income quintile; the agency used the same framework for those estimates that it regularly uses to measure the distribution of income as well as transfers and federal taxes.

CBO’s analysis focused on two measures of income: market income and income after transfers and taxes. Market income consists of labor income, business income, capital income, and other income from nongovernmental sources. Income after transfers and taxes accounts for additional factors such as cash payments from the government (that is, transfers such as those for Social Security and unemployment benefits) and federal taxes. Both measures were adjusted to remove the cost of health care benefits that people receive from the government or their employer, because consumption of those benefits is not included in household consumption as measured by the consumer price index for all urban consumers…. By CBO’s estimate, aggregate incomes grew more than prices did between 2019 and 2023. Over that four-year period, the average annual growth of real adjusted income (that is, adjusted income with the effect of the increase in the CPI-U removed) after transfers and taxes was 2.1 percent, and that of real adjusted market income was 2.6 percent.

Oh did it, then?

We forget what things were like before the pandemic, and how much less everyone made in typical jobs. For example, average hourly wages jumped by a significant amount early in the pandemic (mostly due to lower-wage jobs being the ones more likely to have layoffs), and stayed elevated even after the most severe parts of the pandemic had passed and those lower-wage jobs and businesses came back.

Just because people have more of a cushion, it still doesn’t mean inflation hasn’t jacked up prices in the meantime. CBO admits that things cost quite a bit more than they did in 2019, by an average that ranges to 4.4% to 4.7% a year. In addition, the cost of everyday expenses have gone up slightly more for lower-income Americans than richer ones.

Those differences in cost burdens help to explain why CBO says that lower-income Americans ended up having smaller gains vs inflation than richer Americans did over those 4 years. CBO also says that richer people had bigger gains in income in that time period.

The difference in those percentage changes reflects two factors: Price increases were greater for the typical consumption bundle purchased by lower-income households than they were for that purchased by higher-income households, and the income of households in the highest income quintile grew more in percentage terms than the income of other households did (see Figure 1).

(Reminder - in these charts, the more the share declines, the easier it was to pay the bills.)

We also haven't seen much evidence of a consumer pullback in the face of these higher prices over the last 2 years, which you'd likely be seeing if people were really falling further behind.

The Washington Post is very, very wrong about the economy https://t.co/vWfNvwpkd5 pic.twitter.com/wDttBYoCy3

— Kevin Drum (@kdrum) May 19, 2024

Whatever else you can say about the economy, consumers are not pulling back on spending

And guess what? The government also publishes lots of other handy statistics! I'll spare you the charts, but real wage growth has been up steadily; home sales are down from their 2021 boom year but have increased lately; auto sales are up and have been steady lately; and durable goods consumption is up. Inflation has been hovering around 3% for an entire year, which is not especially dire. Hell, even consumer sentiment, which sparked this article in the first place, has been steadily up except for the single month of May—so it's a little early to be pretending there's some kind of downward trend.

I did notice that retail sales were flat in April, so seems like something we'd want to keep an eye on for the next couple of months of data. But we have also seen Aldi and Target announce price cuts this month, which tells me that these companies are starting to see consumers being less accepting of higher prices....and that much of our "inflation" was GREEDflation all along.

Perhaps that's a sign that we are continuing to head back toward trends we saw before the pandemic, which had generally lower nominal increases in wages, spending and prices. But that CBO report is a reminder that as 2023 ended, Americans were generally better off than they were 4 years ago when it came to making ends meet, no matter how annoyed they might be when they get reminded of higher prices in their everyday lives.

Lots of good signs for Wisconsin's job market this week

While the US unemployment rate has slowly been inching up toward 4% in the last few months, we got more proof on Thursday that Wisconsin is going in the other direction, with our rate falling below 3.0%.

Place of Residence Data: Wisconsin's April 2024 preliminary unemployment rate fell to 2.9% from 3.0% in March. The labor force decreased 500 over the month, to 3,139,500. The number of people employed increased 600 over the month, to 3,047,700. The number of unemployed people decreased 1,300 over the month, to 91,700.

• Place of Work Data: Total nonfarm jobs increased 900 over the month and increased 24,100 over the year, to 3,035,300 in April. Wisconsin added 1,000 private sector jobs over the month, to 2,623,900 jobs.

That payrolls number would have been better than +900 if it wasn’t for a seasonally-adjusted loss of 5,100 jobs in Accommodations and Food Services. I’m not sure if that’s just a delay of seasonal hiring, or if that’s a sign of a slowing consumer here, but it’s a major difference from most other sectors in the last month.

That includes a welcome increase in manufacturing jobs (+2,000), which came after a loss of 2,600 in March. Likewise, there was a gain of 1,300 in health care/social assistance, making up for a loss of 1,100 in March as hosptials in Eau Claire closed, and we saw a seasonally-adjusted 1,200 in arts, entertainment and rec (reflecting a higher-than-normal April increase of 4,100 jobs there).

And there was even better news that came in another report, as Wisconsin is now among the leaders in inflation-adjusted wage growth.

Both wage growth and inflation vary from state to state, with some faring far better than others. @Morning_Joe pic.twitter.com/tqT21g3aSH

— Steven Rattner (@SteveRattner) May 16, 2024

We also saw a separate report on Friday that said Wisconsin’s job openings rose by a seasonally adjusted 23,000 between January and March (+14.4%), and was at the second-highest rate of openings in the Midwest.

In addition, seasonally adjusted layoffs dropped to a multi-month low in March, and quits have started to edge back up. All are good signs if you’re a worker looking for the ability to raise your pay.

While we need more capacity in Wisconsin in both people and housing to keep these good times rolling along, there’s also no doubt that the state’s economy was in very good shape in April 2024. And I couldn’t help but think about this situation might be getting portrayed in a Bizarro World where GOPs were in control and Wisconsin’s economy was this strong.

Unemployment back under 3% in Wisconsin (2.9%). Imagine the press blitz we'd have if Walker/Trump were in charge when that was happening. #wiunion #inners #wipolitics https://t.co/leEzYv5Lc5

— JakeEdwards (@JakeMadtown) May 16, 2024

INFLATION WATCH! Wall Street thinks it's calming down, with rate cuts coming sooner?

There was a heavily-awaited Consumer Price Index report for April. on Wednesday. And when I read that CPI went up 0.3%, I was worried that it would lead to more INFLATION PANIC, since that makes for 4 straight months of 0.3% or 0.4%, and an annualized rate of 4.2%.

But instead, the stock market loved the results, because of the expectations of the "experts".

Consumer prices rose 0.3% in April, less than expectations https://t.co/Zpdh9TpvSJ

— CNBC (@CNBC) May 15, 2024

RECORD HIGH CLOSES: All three stock indexes, the #Dow, S&P 500 and #Nasdaq all closed Wednesday with record highs as the Consumer Price Index showed inflation easing in April. The #Dow is close to hitting the 40,000 mark for the first time.

— newsbell (@newsbell) May 15, 2024

So while a 0.4% increase in CPI in March made everyone think that info would delay interest rate cuts from the Federal Reserve, a 0.3% increase in April makes them think the Fed will cut rates sooner. Interesting.

A big positive that people were drawing from the report was that the index for the cost of food at home (i.e groceries) dropped by 0.2%, after 2 straight months of being flat. Food at home is only up 1.1% for the last 12 months, and it’s no coincidence that Aldi announced price cuts last week for many of their groceries, to front-run the other grocers that have used greedflation to grab fat profits.

And given what I saw from the Producer Price Index report, food prices should remain on the level in the near future, as food prices that businesses pay suppliers dropped by 0.7% in April, and the index for processed and unprocessed foods also fell. Maybe the Fed-watchers are realizing that the 1.1% increase in energy and 8.5% increase in gas prices between January and April is not going to continue in the next CPI report. Heck, I just paid $3.17 a gallon here in Madison this week, and the national average in mid-May is down 4 cents (1.2%) vs what it was in April.

However, two areas continue to stay high. One is shelter, which had its third straight 0.4% monthly increase, and a 12-month increase of 5.5%. And yes, I have frequently mentioned that some of the shelter increase is misleading, because it often reflects rent increases from several months ago and doesn’t account for the fact that the many Americans that are set in their homes in fixed-rate mortgages aren’t paying much more at all.

But the shelter index also hasn’t gone down in the last year, and places like Madison continue to be unaffordable for too many that weren’t lucky enough to have grabbed a home 3 years ago. It’s an economic burden that is likely an explanation for why people aren’t as happy as a growing economy with sub-4% unemployment would make you think they’d be.

Also, there was another 1.8% increase in auto insurance prices, with the 22.6% jump over the last 12 months for car insurance being the largest 12-month jump in that category since 1976! This is an unexpected expense that has to be hurting some. At the same time, it doesn’t seem sustainable and is something that would seem to beg for Congressional hearings as well as “downshifting” by consumers where they carry less insurance or pay more on claims out of pocket.

A higher print of 0.9% on the import price report should keep us from breaking out the party hats for now. That increase is largely due to higher oil prices from overseas and (oddly) an increase of 1.7% for imported food and beverages. Not that we count on imports for that much of our food supply, but maybe something to look for in the next month or two.

Still, I think the panic of 4-5 inflation for Q1 2024 is indeed looking like an early-year fluke and a last-ditch attempt to grab some profits before consumers and competitors stopped accepting higher prices. Let's see if May goes even lower than April's 0.3% increase, and if so, then we're back around 3% for the annual rate for 2024, and the Fed can stop keeping its interest rate at multi-decade highs.

US consumers grumpy due to higher prices. But maybe that drops inflation in Q2.

Last week, we found out that US consumers were grumpy as May began.

U.S. consumer sentiment fell sharply in May to the lowest level in six months as Americans cited stubbornly high inflation and interest rates, as well as fears that unemployment could rise.

The University of Michigan’s consumer sentiment index, released Friday in a preliminary version, dropped to 67.4 this month from a final reading of 77.2 in April. May’s reading is still about 14% higher than a year ago. Consumers’ outlook has generally been gloomy since the pandemic and particularly after inflation first spiked in 2021.

Well, I'd also say MAGATs not having their cult leader in the White House is a reason behind the lower numbers since 2021. But it is still a noteworthy drop that goes against an upward trend for most of the last 2 years.

While I do think that the job market isn’t booming like it was at the end of 2023 and start of 2024, I also have no doubt that GOP politicians, Wall Streeters and media trying to make “1970s-style stagflation” into a thing is a major reason for that gloominess. It is cynical and isn’t close to what our economic reality is in May 2024.

But that reality doesn’t stop the average American from being receptive to a message of “Prices are higher and isn’t that annoying? Remember when things weren’t so expensive?” And rather than be happy about higher wages and sub-4% unemployment, they’re asking (and being asked) why higher wages aren’t raising the standard of living as much as they think it should. I get that frustration, but I’d also argue that what we have now is better than the 2007-2014 era of higher unemployment, stagnant wages and declining home values.

Later on in the AP’s rundown of the consumer sentiment numbers mention a couple of large restaurant chains that are saying 2024 is going to be challenging, because the consumer is cutting back.

Starbucks lowered expectations for its full-year sales and profit in late April after a terrible quarter that saw a slowdown in store visits worldwide. Starbucks reported a sharper and faster decline in spending in the U.S. than it had anticipated.

McDonald’s last month said that it will increase deals and value messaging to combat slowing sales. The Chicago fast food giant said inflation-weary customers are eating out less often in many big markets.

OR…maybe everyday Americans have just had enough of the price hikes and profiteering from these places, and aren’t accepting what the corporations have to offer. Maybe those corporations are going to have to go back to the laws of supply and demand, and lower/limit their prices

Here's an example of a grocery chain that plans to do just that.

Aldi drops prices on 250 grocery store items to help shoppers save this summer https://t.co/1ET3TuhhCs

— Action News on 6abc (@6abc) May 11, 2024

Earlier [last] week, Aldi announced it will further drop its everyday low prices on more than 250 summer essentials from picnic necessities to barbecue basics, which the company says will pass along $100 million in savings through Labor Day.

"ALDI is always looking for ways to help customers save money, but with more experts warning of persistent inflation, the time was right to deliver even greater discounts on our already low prices for the second year in a row," Dave Rinaldo, president at ALDI U.S., said in a statement. "We don't want food prices to hold people back from getting together with friends and family or spending time outdoors this season."

Among other items, Aldi is cutting the cost on seasonal must-haves including family packs of chicken breast, USDA choice Black Angus sirloin steak, French baguettes, organic avocado oil, organic granola bars and dried cranberries.

OR…..maybe they and other grocery giants have been jacking up prices well above cost this whole time of “stubborn inflation”, and now Aldi is trying to run ahead and grab market share in mid-2024 by lowering prices.

These types of stories make me think that the 4.5% rate of inflation in Q1 isn’t going to continue in Q2. We know that the increase in gas prices in early 2024 has leveled off in the last month, and consumer backlash may also be starting to make companies back away from keeping prices inflated in order to “increase the numbers” to the shareholders.

The big inflation reports come out in the next 2 days (PPI on Tuesday and CPI on Wednesday), and that will likely guide both Wall Street and the media as to what their theme will be for the rest of the week and the near future. They will either continue to be promoting CHRONIC INFLATION, or if the inflation rate goes back to the moderation that we saw in much of 2023, which will lead to DOW 40,000 and other “bullish” stories.

The inflation and jobs/wages reports over the next 3-4 months, along with the US consumer sentiment that is influenced by media reports of these numbers, will go a long way towards determining whether we lose our democracy in less than 6 months. And knowing that something as simple as the spin off a CPI report could be a major influence on the outcome is terrifying and infuriating.

The Fox-con is dead. Long live Microsoft?

We knew Microsoft was working on a new development in Racine County, but they announced something much bigger than we had heard of this week, and the Prez was happy to fly in for the photo op and do a little compare and contrast with The Former Guy.

Biden delivered a simple message in Wisconsin in announcing $3.3 billion Microsoft investment: I'm keeping my promises on bringing jobs and infrastructure here, Trump didn't (w/Foxconn). pic.twitter.com/LbSLoYPIeB

— Natasha Korecki (@natashakorecki) May 8, 2024

Biden joined Microsoft President Brad Smith and Gov. Tony Evers Wednesday at Gateway College's Integrated Manufacturing and Engineering Technology Center to announce the expansion of Microsoft's data server complex, and the tech giant's plans to add about 2,000 permanent jobs over time. The new value of the development is more than three times what was announced a little more than a year ago when Microsoft signed its first deal to buy land in the village's Wisconsin Innovation Park.

Biden said the Microsoft development is a "comeback story," playing out across Wisconsin and the nation, that stands in contrast to the 2017 efforts of Trump and state Republican officials to bring Foxconn to Mount Pleasant. Microsoft is building its data center on land that Foxconn was initially expected to use for a $10 billion LCD manufacturing plant that Trump touted as the "eighth wonder of the world." Neither the investment nor the 13,000 jobs Foxconn promised materialized…..

Biden referenced Trump and Foxconn early in his 20-minute speech before an audience of about 200, using that experience to contrast with the more than 700,000 jobs that he said have been added in Wisconsin under his watch.

That growth, he said, stems from his "Investing in America" initiative, a package of bills passed in late 2021 and early 2022 that aims to encourage investments in domestic manufacturing and infrastructure, accelerate the nation's transition to clean energy, and create new, well-paying jobs.

Even more remarkable was that Fox allowed this fact to break into their BubbleWorld.

Hell has frozen over: Fox News is punking Trump and touting President Biden. Biden's new investment with Microsoft is creating thousands of new jobs on the exact same land in Wisconsin where Trump promised he'd create jobs, but failed miserably.pic.twitter.com/Lq72hzjZFf

— Bill Madden (@maddenifico) May 8, 2024

I’m generally skeptical when it comes to any of these jobs announcements, especially when it’s under the guise of “check out the number of jobs that are coming to this place in 2-3 years!” And doubly so when it comes to investments in AI, which have all of the characteristics of a Bubble with very little produced that ends up actually improving life for everyday Americans (PR Exec and tech journalist Ed Zitron had a great podcast on this a couple of weeks ago).

But I will say that this seems a lot more legitimate than what this thing was under the old regime.

The Trump/Walker scam had a much hugh level of massive public subsidies and land grabs than anything Microsoft will get. Instead of being gifted the land, Microsoft bought it from the Village of Mount Pleasant for nearly $100 million.

(Quick side note about Foxconn – have we ever found out if they paid the $30 million that they were supposed to pay to the Village of Mount Pleasant this January? I’ve never seen confirmation on this one way or the other, and I could definitely see the local yokels in village government saying “We’re good” now that Microsoft has paid for much of the land originally cleared for Foxconn.)

For the Microsoft development, the biggest form of public assistance will come in the form of a sales tax break for data centers that was part of the 2023-25 state budget (click here to see it, at provision number 13).

Define "qualified data center" to mean one or more buildings or an array of connected buildings owned, leased, or operated by the same business entity (or its affiliate) and for which all of the following apply:

a. the buildings are rehabilitated or constructed to house a group of networked server computers in one physical location or multiple locations in order to centralize the processing, storage, management, retrieval, communication, or dissemination of data and information; and

b. the buildings create a minimum qualified investment in this state of any of the following amounts within five years from the certification date: (i) $150,000,000 for buildings located in a county having a population greater than 100,000; (ii) $100,000,000 for buildings located in a county having a population greater than 50,000 and not more than 100,000; (iii) $50,000,000 for buildings located in a county having a population of not more than 50,000; or (iv) for buildings located in more than one county, the minimum qualified investment provided for the most populous county in which the buildings are located…..

Require WEDC to certify a qualified data center for purposes of the sales and use tax exemption. Require the certification to include a description of the geographic location or locations and buildings of the qualified data center and an identification of the business entity. Require WEDC to contract with that business entity and, upon request, to amend the certification and contract to include one or more additional locations and buildings of the qualified data center. If WEDC certifies a qualified data center for purposes of the sales and use tax exemption and the data center fails to satisfy the minimum qualified investment requirements described above, require WEDC to revoke the certification. All amounts of the sales and use tax exemption claimed under that certification as of the date of revocation become due and payable to each taxing authority against whom the exemption was claimed in the amounts so claimed. WEDC may grant an extension of time within which the qualified data center may avoid revocation by satisfying the applicable qualified investment requirement.

Based on DOR’s estimates related to how many sales taxes get reduced, that’s a write-off of around $130 million if the full $3.3 billion of construction is realized, and a few million a year deducted for every expenses. Still nowhere near what was given away for Foxconn, but it isn’t nothing, either.

You'd think the state rep whose district includes the Microsoft development would be happy about the new jobs and tax base. But instead, he used to occasion to whine like the partisan hack he is.

Might have been nice of you to give credit to the folks in Mount Pleasant and Racine County who actually made this happen. Biden had nothing to do with this but his desire to take a victory lap for other people's work sounds very familiar... https://t.co/LFoySTCh0K

— Robin Vos (@repvos) May 8, 2024

Napoleon is SALTY!

There also are some education-based assistance and link-ups with other Wisconsin-based organizations that Microsoft will be a part of.

Microsoft's push in southeast Wisconsin isn't only focused on buildings. Smith said it will also make a multimillion-dollar investment in training programs that will teach business and technical leaders how best to adapt AI and transform work culture, support start up businesses, prepare hundreds of students for careers as data center technicians, and provide boot camp-style training for more than 100,000 people who need new skills to work in the artificial intelligence economy.

The effort builds on Microsoft's previous investments in business and workforce development in Wisconsin and brings in many of the same partners, including the University of Wisconsin-Milwaukee's Connected Systems Institute, the Green Bay Packers and the Titletown Tech business development center, the Madison startup accelerator gener8tor, United Way and Gateway Technical College.

To support it, the Wisconsin Economic Development Corp. will provide $500,000 to TitletownTech, the Green Bay-based Packers-Microsoft venture capital and business development partnership. The funds will help TitletownTech set up a Milwaukee office at UWM's Connected Systems Institute, a research and education center focused on advanced industrial processes.

Microsoft also intends to open an AI Co-Innovation Lab lab at the Connected Systems Institute to help Wisconsin manufacturers, entrepreneurs and other business connect with Microsoft AI experts for guidance on implementing AI technology to grow their businesses. WEDC will provide an additional $500,000 to cover capital expenses associated with the initiative.

Yes, I still get wincy when I see businesses trying to run labs at public institutions of higher education (because the business gets a voice in what the colleges and tech schools teach and can take advantage of “free” research). But again, this seems a lot more legit than the pathetic Foxconn PR garbage where they publicly announced plans before the 2018 election to give $100 million to UW-Madison to partner on innovation and research. (The actual amount Foxconn gave? Less than $1 million.

We always knew this was BS.

When it comes to building these items, Microsoft has already spent the money to buy the land (vs being gifted it), appears to mostly be putting in their own funds and investments as part of this, and can tell you what they’re going to do. In fact, Microsoft has its own page here you can track the progress of the project in Mount Pleasant, and the steps that have been taken so far.

That’s a lot more than the empty promises and PR BS that Foxconn would occasionally spit out over the last 7 years, with little actual Foxconn activity that followed the announcements.

But the memory of empty Foxconn “innovation centers” throughout the state and the reality of modern automation got the attention of the Wisconsin Examiner’s Ruth Conniff, who gave a healthy dose of skepticism on what we'd eventually end up with.

Sure it's better than the Foxconn fiasco, but a Microsoft data center might not be the job generator advertised by Biden https://t.co/Z42J1OAkJs

— ruth conniff (@rconniff) May 9, 2024

In its press release touting the project, Microsoft does not mention a specific number of permanent jobs.....

Standing at the edge of the security perimeter two blocks outside the event, Martin Hying, a Racine resident who said he’s been an I.T. professional since the 1980s, held a sign that said “A datacenter does not create 2,000 local long-term jobs. It might create 20. I know. I run three.”

“You don’t need 2,000 people to maintain a facility like this,” Hying said.

Plus, he added, the higher skilled jobs involved in maintaining the data center’s servers can be done remotely. “They can be anywhere. They can be in Colorado, or they could be in Cambodia or Calcutta, anywhere in the globe.”

I have similar skepticism about 2,000 permanent jobs, given that the tech industry seems hell-bent on stretching as much profit out of as few people as possible these days.

But in the short term, this looks to at least be a real development that'll result in jobs and activity in what has been flattened, empty land for the last 7 years. And it lessens the chances of the Village of Mount Pleasant from going belly-up due to the heavy debts it ran up when it gambled on Foxconn and gave everything away before anything actually happened.

While I'd rather there be no need for subsidies and tax breaks for any job creation, I will say that Microsoft in 2024 seems to be a whole lot of a better deal than the Fox-con of 2017.

Social Security fully funded till 2035, and much longer than that. Unless we choose not to

Saw this headline yesterday.

Just In: Social Security is projected to be insolvent by 2035 and Medicare by 2036.

The good news: This is better than last year's projection of SS insolvent by 2034 and Medicare by 2031. (The strong labor market is helping here)

The bad news: It's urgent to ACT to shore up…

— Heather Long (@byHeatherLong) May 6, 2024

Heather, I usually like your stuff. But this time...

WRONG!

2035 is when the trust fund that pays for Socal Security is not able to pay the same amounts of benefits that it would pay out today. That is NOT "insolvency" for Social Security, as the trust fund will still be paying benefits (83% of them, based on the estimates), and Americans will be entitled to the benefits they have earned, unless laws are changed that reduce the amount of benefits that they have had . If no laws change, no benefits change. We'd just have to figure out another place to pay for the rest of it.

Let's go into the summary of the report from the Social Security Administration, and see how they explain the reason for improvement of the combined OASDI trust fund (which we generally call the "Social Security fund").

The projected long-term finances of the combined OASDI fund improved this year primarily due to an upward revision to the level of labor productivity over the projection period and a lower assumed long-term disability incidence rate. These improvements were partially offset by a decrease in the assumed long-term total fertility rate. The revision to labor productivity was based on stronger economic growth in 2023 than had been anticipated in last year’s reports. The Trustees lowered the long-term disability incidence and fertility rate assumptions based on continued low levels in both series.

The projected long-term finances of the HI Trust Fund also improved this year relative to last. This improvement was due to several factors, including a policy change correcting for the way medical education expenses are accounted for in Medicare Advantage rates starting in 2024, higher payroll tax income resulting from the stronger-than-expected economy, and actual 2023 expenditures that were lower than projected last year.

But it's worth remembering that "Social Security" is really two separate programs - Old Age and Survivors Insurance (OASI) and Disability Insurance (DI). And the Trustees' report says what actually runs out is the OASI trust fund, while Disability's trust fund will be just fine.

The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, unchanged from last year's report. At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 79 percent of scheduled benefits.

• The Disability Insurance (DI) Trust Fund is projected to be able to pay 100 percent of total scheduled benefits through at least 2098, the last year of this report's projection period. Last year's report projected that the DI Trust Fund would be able to pay scheduled benefits through at least 2097, the last year of that report's projection period.

In fact the Social Security Administration says that, Disability's trust fund is projected to keep growing throughout the next 75 years, unlike OASI and Medicare's Hospital Insurance fund (HI).

Isolating the numbers to last year, we see that DI added $29 billion to their trust fund in 2023, while OASI's trust fund lost more than $70 billion.

This leads me to ask a simple question - why don't we change how much of our Social Security taxes go into OASI vs Disability? This would extend the years that OASDI's trust fund is able to be around (likely to 2035), and raises the amount of interest-earning funds that are in there over those 11 years. This is something the US did to help Disability's situation in 2016, so it's not unprecedented.

On November 2, 2015, President Barack Obama signed into law the Bipartisan Budget Act of 2015 (H.R. 1314; P.L. 114-74). Among its many provisions, the act authorized a temporary reallocation of the Social Security payroll tax rate between the OASI and DI trust funds to provide DI with a larger share for 2016 through 2018. Specifically, the DI trust fund’s share of the combined tax rate increased by 0.57 percentage point at the beginning of 2016, from 1.80% to 2.37%. Because the act did not change the combined payroll tax rate of 12.40%, the portion of the tax rate allocated to OASI decreased by a corresponding amount. This means that OASI’s share of the combined tax rate declined by 0.57 percentage point at the start of 2016, from 10.60% to 10.03%. For 2019 and later, the shares allocated to the DI and OASI trust funds are scheduled to return to their 2015 levels (i.e., 1.80% to the DI trust fund and 10.60% to the OASI trust fund).

As that passage mentions, the pre-2015 allocations went back into effect in 2019, and have stayed there since then. There's no reason we couldn't change the allocation again, to adjust to the decline in Disability costs.

Of course, there's one overriding thing I want to reiterate with all of this talk about Social Security's finances. We are talking about these programs' trust funds, we are not talking about the programs' ability to continue. If Congress does nothing, Social Security and the amount of its benefit payments will NEVER go away.

We'd just have to pay for the extra funds beyond what the trust funds would cover, likely by doing the same thing we do for most things that the Feds pay for - regular income taxes and deficit spending. The Congressional Budget Office already includes Social Security and Medicare in their budget projections, so there's nothing that would change from that perspective. It would just be changing the nature of a program that "pays for itself" and instead make it more like any other federal spending. We'd just have to decide if we'd want to keep funding it as-is, fund it more or less than today, and figure out if we want to pay the taxes or fund the deficits to keep it going.

Like most things, if we taxed the rich like we did in the 1990s (or especially if we did it like we did back in the glory days of the 1950s), this would be taken care of without having to worry for pretty much the rest of our lives. And if you hear anyone try to insist Social Security is "going broke", THEY ARE LYING OR STUPID, and should be ignored from that point forward.

Do higher interest rates in 2024 make inflation ...HIGHER? Makes sense to me

All the way back to high school, we're taught that the Federal Reserve raises interest rates to slow inflation, with a slower economy as a side effect becasue of higher borrowing costs. But what if that doesn't work in 2024, and in fact, the higher interest rates are causing housing prices to be higher than they'd otherwise be?

That's a theory that I saw floated out a few weeks ago, and it's starting to add up to me.

The Federal Reserve raised rates the most in decades to bring down inflation. High borrowing costs are supposed to put the brakes on the economy to keep consumer prices from rising too quickly. But Jack Manley at JPMorgan Chase argues that the Fed’s current rate range of 5.25% to 5.5% are actually inflationary at this point, and that prices won't stabilize more until the the central bank starts cutting.

“A lot of what’s going on with inflation today can be linked very closely with the level of interest rates,” Manley said. “You slice and dice inflation and whether you’re looking at the headline number, whether you’re looking at the core number, you’re removing the goods equation — so much of it has to do with the rate environment.”...

Oppenheimer’s John Stoltzfus hinted last week at the idea that lower mortgage rates would prompt more people to sell their homes, leading to more supply and potentially softer prices. If people could afford to buy homes, they wouldn’t need to rent as much, and rents could stabilize. Manley pointed to housing and also to inflation from auto and other insurance premiums, which he also noted was somewhat tied to rates.

“You’re not going to see meaningful downward pressure on shelter costs until the Fed lowers interest rates, mortgages come down to a more reasonable level, and supply comes back on line, because people are willing to step into that market,” Manley said.

Here's the interview clips on Bloomberg where Manley goes into his theory some more, and how March's gasoline-driven increase in inflation is something the Fed should largely ignore when making future decisions on what to do with interest rates.

"A lot of what's going with inflation today can be linked very closely to interest rates." Jack Manley of JPMorgan says we've entered a 'chicken and the egg' phase between the Fed and inflationhttps://t.co/CmyQbFmu03 pic.twitter.com/KTrabyEiIV

— BSurveillance (@bsurveillance) April 8, 2024

I look at our current situation with our home as an example of this. We're not looking to move, but if we did, it would take a whole lot more to justify it than normal. We're locked into a 3% refinanced mortgage from 2020, based on what we paid for our house 11 years ago. Our recent home assessment has our house's value at twice the amount we paid for it, which is nice for net worth, but really doesn't do much for us now beyond giving us more ability to take out a line of credit for a Home Equity Loan (albeit at a higher rate than 3%).

And if we wanted to move, we'd have to either pay in all-cash at these elevated prices (not possible for us) or take out mortgage loans at 7% vs the 3% we are paying now, so us and a lot of others are staying in our homes. Manley notes that this decreases supply of homes on the market, and drives up prices for homes even further. It also means more people aren't willing or able to buy houses, so they have to rent, which means demand and prices for rental housing go higher.

Reuters also had a rundown of this theory which cited a study by the Fed itself which indicated that higher interest rates can indeed inflate housing prices.

....a discussion paper by economists Daniel Dias and Joao Duarte, [was published] by the Fed's Board of Governors in 2019, less than a year before the onset of the COVID-19 pandemic.

The study concluded that "housing rents increase in response to contractionary monetary policy shocks" and that "after a contractionary monetary policy shock, rental vacancies and the homeownership rate decline."

Put another way, the research showed that rental costs tend to surge as rising mortgage costs force those put off from buying houses to rent instead - while also reducing the number of potential homes to rent.

And reinforcing the peculiarity of the response of rent, the paper showed all other main components of the consumer price index (CPI) either decline in response to tighter monetary policy or are not responsive.

Reuters includes this chart which shows that the higher interest rates have effectively brought down inflation for goods in this country over the last 18 months, but housing and services are up by more.

And a huge driver of that increase in services? The higher cost of car insurance and repairs and maintenance of both autos and homes, which is a downstream effect of cars and homes having higher values. If lowering rates freed up the chances of more purchases of newer assets and and moves, maybe those industries couldn't charge as much either. Just a thought.

Much like how "the experts" kept anticipating a recession that never came in 2022 and 2023 in the wake of these higher interest rates, maybe we need to recalibrate what is causing inflation in 2024, and that higher interest rates might not be the way to limit price increases. In the current rate situation, I think many Americans feel trapped, and that they're being pulled on a ride that limits the comfort they should have from steady employment and growing wages.

A more affordable supply of both housing and vehicles would help to alleviate one of the few real problems in this economy - where things that were regular bills in the standard of living now feel like annoying burdens to many. Cutting interest rates from their 23-year highs might well be a way to lessen those burden, and expand the possibilties. It's all the more reason that the Fed should be dropping interest rates sooner than later, because that move would seem likely to increase the options for both homeowners and renters, encourage more supply of homes and vehicles to go onto the market.

A weaker jobs report excites Wall Street, and still looks good vs the Trump years.

Hey, it’s jobs Friday! What did we get?

JUST IN: The US economy added a net 175,000 jobs in April — a solid gain, but below expectations of ~250k. Healthcare was the big sector hiring.

Unemployment rate: 3.9% —> The unemployment rate has been below 4% for 27 months. That hasn’t happened since 1967-70.

Wages: +3.9% in… pic.twitter.com/RKYy1orroq

— Heather Long (@byHeatherLong) May 3, 2024

175,000 job gains in April. Healthcare led the hiring.

Healthcare +56,000
Social aid +31,000
Retail +20,000
Wholesale trade +10,000
Construction +9,000
Warehouse +8,000
Manufacturing +8,000
Gov't +8,000
Hospitality +5,000

Temp help -16,000 -->Temp help is -185k in past yr… pic.twitter.com/IU65mHRqhq

— Heather Long (@byHeatherLong) May 3, 2024

Lotta “meh” with this report. The 175,000 jobs added is the lowest monthly gain since October and the 3rd lowest since 2022. The 0.2% increase in April’s hourly wages follows a downward-revised 0.1% increase in February, and a 0.3% increase in March, and accounts for the lowest three-month run since President Biden’s first three months in office in early 2021. Which makes all of the panic we had earlier in the week about a 1.1% increase in Q1 wages look even more foolish

In addition to the slowing wage growth, my other main concerns with the report is that nearly half of the gains were concentrated in health care and social assistance (+87,000), and construction only added a seasonally-adjusted 9,000 jobs instead of the 23,000-a-month pace that we’d seen in the 12 months before April 2024. With the construction numbers, I wonder if that slowdown corresponds with a slowdown in sector spending for March, or if warm weather simply pulled forward some seasonal hiring that usually would happen in April (March was up 40,000, so it's on trend if you average the two months).

On the flips side, if you want the Fed to cut interest rates sooner than later, but still want the economy to keep growing, this is exactly the type of report you’d be looking for. Wage growth slowing but still continuing, in the same April where gas prices leveled off and oil futures fell to their lowest levels in 6 weeks. None of that indicates inflation should continue at the elevated level we saw in Q1, which means the 2-3% annual rate we were seeing for much of 2023 should resume.

The jobs report’s reporting of tamer wage growth caused the yield on the 2-year bond to drop by nearly 0.2% today. And the prospect of lower inflation giving space for interest rate cuts got traders to buy up stocks, reversing all of the sizable losses from earlier in the week.

Stock Market #StockMarket today: #stocks surge as jobs report revives rate-cut bets, Apple jumps 6% - Yahoo Finance https://t.co/jsfPFirlbm

— Stock Market News (@Stock_Market_Pr) May 3, 2024

US stocks surged on Friday as upbeat earnings from Apple (AAPL) lifted spirits and a weaker-than-expected jobs report revived bets that the Federal Reserve could cut interest rates sooner than thought.

The Dow Jones Industrial Average (^DJI) jumped 1.2%, or about 450 points, while the S&P 500 (^GSPC) rose 1.3%. The tech-heavy Nasdaq Composite (^IXIC) increased 2%....

The report pushed up bets on a sooner-than-expected rate cut from the Fed. According to the CME FedWatch tool, traders see a roughly two-thirds chance of a rate cut in September.

But even though the jobs numbers were lower than what we've been used to or what the "experts" were expecting, it's still a good report if we compare it to the pre-COVID times. Half of the 18 months from June 2018 to the end of 2019 had job growth lower than 175,000. (You know, the times that Trump claims was “the best economy ever”.) And 12-month job gains averaged less than 175,000 a month for an entire year between early 2019 and early 2020, before the COVID pandemic would hit the economy and jobs market full force.

So while it's not the blowout numbers that we saw in the first three months of the year, 175,000 jobs and 0.2% wage growth would be considered a pretty good jobs report before the 2020s. And while job growth likely will continue to soften from the strong pace of Q1 2024, staying below 4% unemployment is still a great place to be in Spring 2024.

We will need more data from April to see if other parts of the economy go along with this slower hiring in that month, or if output and spending kept rolling along. And we will need to see inflation figures over the next couple of weeks to see if we might get back toward real wage growth, or if wage growth has failed to exceed inflation for a third straight month. If it’s the latter case, then we have an economic concern that’s worthy of paying attention to, because that's a real reason for American consumers to be gloomy, as opposed to complaining about inflation that seems to be heading back down.

Things are generally good, and we are still at/near full employment. And just because MAGAs might want to believe things are bad, that doesn't make it true in the Real America.

New data should JOLT us and the Fed away from inflation fear

And even Fed Chair Jerome Powell pointed to this and the reduction in openings when he gave his press conference I looked into the JOLTS report, and saw that March’s drop in job openings was almost entirely due to 2 sectors – construction, and finance/insurance.

Change in job openings, March 2024
Total, US -325,000
Construction -182,000
Finance/insurance -158,000
ALL OTHER JOB SECTORS +15,000

Those other job sectors accounted for more than 7.85 million or the 8.49 million job openings in March. That number is slightly below where it was at the end of 2023, with declines in January and February, and eking out that slight gain of 15,000 in March. Interestingly, comparison finance/insurance has bounced up and come back over the same time period, while openings in construction were steady until its large decline hit last month.

This would indicate that the job market is still growing, but with less urgency to hire. That would be consistent with a “soft landing” and should moderate wage pressures – which the Federal Reserve allegedly wants to see before they cut interest rates. In fact, Fed Chair Jerome Powell pointed to the reduction in openings in JOLTS when he gave his press conference after the Fed meeting let out this afternoon as a sign that rates didn’t need to go higher at this time.

Powell: "I do think the evidence shows that policy is restrictive and weighing on demand. Demand side of the labor market is strong but cooling from several years ago (and there was more evidence of this today from the JOLTs report). It's still high than pre-pandemic, but it is…

— Xander Snyder (@XanderSnyderX) May 1, 2024

So how did construction still add 39,000 jobs in March, continuing its impressive string of gains over the last 2 years? Because the amount of layoffs and discharges in construction dropped by 63,000 in March, and stood at just over half the level it was at in March 2023.

Likewise, there was an overall decline in layoffs and discharges in America in March. That decline more than offset a drop in hiring over the first three months of 2024, and total separations (mostly quits and layoffs) have declined almost as much as hiring has.

This helps to explain how job growth increased in Q1 while fewer hires were happening.

So what I’m seeing out of this JOLTS report is a still-strong jobs market, but one that isn’t overheating, and with labor demand slowly softening. This JOLTS report seems comforting if you fear inflation, as the underlying figures indicate that the demand for labor isn’t as strong and immediate as it was this time last year – we just haven’t had a need for as many layoffs and fewer workers are quitting. This also indicates to me that Tuesday’s freak-out on Wall Street over the 1.1% increase in employment labor costs for Q1 wasn’t warranted, and we aren’t heading back to the inflation levels we saw in 2021 and the first half of 2022.

Let’s see if the lower openings in March translate into softer job numbers for April when the monthly numbers come out on Friday, and if so, let’s see if that moderates wage growth as well. Although I’d argue that even if we were stuck at 4.5% wage increases and 3.5% inflation, that’s still a pretty good situation in the Real World....if that kind of thing matters.