Friday, July 5, 2024

"Meh" for a June jobs report, as we settle into our new post-COVID normal

With some evidence of weaker economic data in recent weeks, a new US jobs report came out on Friday. And it was....meh

I'll point out that given that this is from June, and that the seasonal adjustment deflates the number of jobs added in a lot of sectors. This includes leisure and hospitality, which had 436,000 more jobs overall in that sector, but because it is expected to have 429,000 jobs added in June, that's not very special. No biggie either way.

Yes, unemployment went up again (although the “4.1%” is really 4.05%, which makes me wonder what would have been the meme if the number was 4.04%), and it’s more evidence that we are in a balanced jobs market where any COVID-era adjustments have been absorbed into a new normal for the mid-2020s. The Biden Boom in the both the economy and the jobs market is over, and we are merely in a solid growth mode.

Still, that “new normal” is a better place than we had before COVID became a thing.

Not only that, but I also wanted to look at what things looked like after both President Trump and Biden were able to get their signature economic policies in place, and after the COVID-related job losses of 2020 had been largely recovered. So I did a comparison of what 3-month job growth was starting from January 2018 (when the unemployment rate of 4.0%) and January 2023 (unemployment rate 3.4%).

As you can see, we’ve generally been adding more jobs under Biden than Trump, even starting from a lower unemployment rate in 2023.

I also note that the jobs report indicates that wage growth kept up in June, 0.3% increases in overall average hourly wages, and in non-supervisory positions. With food and gas prices staying stable over the last month (if not outright falling), I would think this translate into another month of real wage growth in June.

The wage growth is especially impressive in the construction and manufacturing sectors, where the 12-month increase in wages is above the 3.9% average rate for all private sector jobs, and the work week has also increased since June 2023.

Average hourly wage, June 2024 vs June 2023
Construction +4.9%
Manufacturing +4.8%

Average weekly wage, June 2024 vs June 2023
Construction +5.7%
Manufacturing +5.1%

At the same time, the annualized rate of wage growth for both the last 3 months and last 12 months is now in the high 3%s. This is a “Goldilocks” scenario where wage growth above almost any time in the Trump era, but also not so high that it would fire any kind of cycle of high inflation.

So what the hell is the Fed waiting for when it comes to lowering interest rates like they did from a much lower level in 2019? Back then, Trump was ramping up for his re-relection campaign and started screeching about Fed policy, despite wage growth and inflation that wasn’t much less than we have today, and with unemployment 0.5% below what we have today.

The Fed caved to Trump’s public pressure back then, but seems to be set on keeping rates at these punitive levels ahead of our 2024 election. To be fair, Biden hasn’t been putting pressure on them to do so, and I think he and other Dems have been wrong to stay silent, because I definitely see a different standard at play here.

That said, even if job growth stays at a decelerated rate of 175,000 that we have been at for the last 3 months, that’s a lot like what we had in the 6 years before COVID.

So when you hear complaints about a “softening” job market, know that it’s merely slowing from the best growth we had in decades over the first 3 years of the Biden Administration. We’re still adding jobs at a good pace, and unemployment is still historically low. I’ll take it.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)