Place of Residence Data: Wisconsin's unemployment was 3.0% in February. The number of unemployed people decreased 4,800 over the month to 95,600. The labor force decreased 4,900 over the month and increased 35,500 over the year to 3,143,300. The number of people employed decreased 100 over the month and increased 21,000 over the year. • Place of Work Data: Total nonfarm jobs increased 3,200 over the month and 22,400 over the year to a record high 3,030,900 jobs in February. Private sector jobs increased 15,700 over the year and held steady over the month at 2,621,500.Not bad, although I'll note that the drop in the unemployment rate from 3.2% to 3.0% was entirely due to those 4,900 people leaving the Wisconsin labor force. Still, a pretty good situation overall. What's more interesting to me is that we also have received updated jobs data for Wisconsin over the last few years, based on more refined data. The losses of 2020 and gains of 2021 are basically the same as we had reported before, but the newly released revisions show that Wisconsin’s job growth was faster in 2022 than we originally knew, and leveled off significantly in 2023. This helps fill in some of mystery as to why Wisconsin’s tax revenues kept growing well beyond what would be expected in 2022 and into early 2023. It also helps explain to me why revenue growth has disappointed in the year after that, because we didn’t grow as many jobs, and nominal wage growth and inflation also moderated over the same time period. Looking at the sectors, we see that there was more hiring in manufacturing in early 2022 than what was first indicated, but employment in that sector started falling off earlier than we thought. On the positive side, manufacturing jobs in the state seem to have bottomed out 6-8 months ago, and is now back on the rise. The newly benchmarked figures reiterated the strength in construction hiring in Wisconsin over the last 2 years, improving on an already-strong number. We also see that Wisconsin’s leisure and hospitality employment rebounded even quicker from its COVID-era losses, with those gains continuing at the start of 2024. So we should look at these newly revised numbers and perhaps re-evaluate where we are in Wisconsin. It seems to me that we had two strong years of job growth in 2021 and 2022, but 2023 saw that slow down. While we are still adding jobs, and having a 3.0% unemployment is unquestionably a good thing, we need to make sure that we are expanding our capacity and attractiveness to workers and families to want to come here and stay here. Or else we could well stagnate in 2024, and be limited in how much more we can keep this good thing going.
Jake's Wisconsin Funhouse
Ventings from a guy with an unhealthy interest in budgets, policy, the dismal science, life in the Upper Midwest, and brilliant beverages.
Tuesday, March 26, 2024
Wis adds jobs in February 2024, and new revisions show faster 2022 and slower 2023.
Wednesday, March 20, 2024
Powell, Fed soothe worries, and seem to understand that jobs and paying bills >>>> CPI at 2% vs 3%
And the response to that statement and Powell's 2:30pm press conference reiterating that guidance was...Federal Reserve officials maintained their outlook for three 25bps cuts this year but forecast fewer cuts than before in 2025 following uptick in inflation; decision was unanimous; fed funds rate remains in range of 5.25% to 5.5% (highest since 2001, for fifth straight meeting)
— Liz Ann Sonders (@LizAnnSonders) March 20, 2024
Woo-hoo! Things haven't changed! Good show, Mr. Fed Chair! I thought was stupid that some were thinking that things had fundamentally changed, and that this would change the interest rate outlook. Job growth is strong, but not at the boom levels we've been at. Inflation may not be at 2%, but it's still hanging at around a 3% rate, as wage growth is at 4-5%, while the Fed Funds rate has stayed at a punitive 5.25%-5.5%. I'd argue that one of the few overhangs in the economy is an offshoot of the high interest rates, and that's the increasing cost of debt."The labor market's in good shape," Powell says.
— Brendan Pedersen 🏦 (@BrendanPedersen) March 20, 2024
Two years after the Federal Reserve began hiking interest rates to tame prices, delinquency rates on credit cards and auto loans are the highest in more than a decade. For the first time on record, interest payments on those and other non-mortgage debts are as big a financial burden for US households as mortgage interest payments. The figures suggest a difficult reality for the millions of consumers who are the engine of the US economy: The era of high borrowing costs — however necessary to slow price increases — has a sting of its own that many families may feel for years to come, especially the ones that haven’t locked in cheap home loans. And the Fed, which meets next week for a policy decision, doesn’t appear poised to cut rates until later in 2024. As monthly debt payments take up more of workers’ paychecks, those consumers are more exposed to potential economic contractions. And the cost of money affects people’s perception of their own prosperity: A February paper from IMF and Harvard University researchers posits that the recent high cost of borrowing — which isn’t captured in inflation figures — is key to understanding why consumer sentiment remains lackluster even as inflation has moderated and businesses are hiring at a healthy pace.This is where the Fed can really make a difference by putting interest rates back toward the middle of what we've had most of the last 30 years. And at the same time, lowering rates can lessen the chances of people having to make significant cutbacks to their spending habits, and businesses from seeing more defaults that can lead to the downward cascade that ends up in recession and job loss. Sure, some may think there's a "mandate" to get inflation down to 2%, and that should be emphasized over jobs or paying bills. But as I've mentioned in the past, that 2% goal was something that was just made up in the last 20 years, and that most growing times in the late 20th century had inflation of 3-4%. With that in mind, I'd rather err on the side of minor inflation over recession and job loss. And given the circumstances in 2024, the best ways to stave off even the possibility of economic decline is to start lowering rates from the high levels that they're at today. Hopefully it comes sooner than later.
Tuesday, March 19, 2024
With oil and gas rising, at least the US has improved on supply and demand to limit any damage
Oil prices rose to multi-month highs for the second straight session on Tuesday as traders assessed how Ukraine's recent attacks on Russian refineries would affect global petroleum supplies. U.S. West Texas Intermediate crude futures gained 75 cents, or 0.9%, to settle at $83.47 a barrel, the highest since Oct. 27. Global benchmark Brent crude settled 0.6% higher at $87.38 a barrel, the highest since Oct. 31.The article goes on to say that that the attacks may reduce Russian gas output by 350,000 barrels a day, but since we're not really buying Russian stuff as it is, should it jack up availability of oil or gas in the US? Yes, I know "world price" and everything, but I also want to look at the supply and demand situation here in the US, to see if we can adjust to these price rises, and to see if we've already made adjustments in the face of 2022's gas price
U.S. crude oil stockpiles in the Strategic Petroleum Reserve (SPR) at year-end will be at or exceeding the level prior to a massive 180 million barrel sale two years ago, U.S. Energy Secretary Jennifer Granholm said on Monday. The U.S. is replenishing the SPR, after President Joe Biden's administration announced a sale of 180 million barrels of oil over six months from the reserve, the largest ever SPR sale, in an attempt to lower gasoline prices after Russia invaded Ukraine. While the Department of Energy only expects to replenish by the end of this year about 40 million barrels since the 180 million sale, another 140 million barrels that would have been drained from 2024-2027 will stay in the SPR due to the cancellation in 2022 of congressionally mandated sales.I would add that the Biden Administration needs to be ready for any future sabotage by overseas countries (Saudi Arabia didn't pay Jared Kushner all that money for nothing), and supply manipulation by oil companies at home. The White House needs to get and stay ahead of the curve on this, and show the public you're going to take action to limit gas price increases at home. Both in putting more oil onto the market (to increase supply and cool off speculation) and in warning the American people about any attempts for manipulation from oil oligarchs at home and abroad.
Tuesday, March 12, 2024
Decent February job growth. But the boom times may be ending
JUST IN: Another strong jobs report. The US economy added 275,000 jobs in February as the hiring boom continues. (Hiring was 229k in January and 290k in December.)
— Heather Long (@byHeatherLong) March 8, 2024
Unemployment rate: 3.9% —> It’s been below 4% for two years
Wages: 4.3% in past year (above 3.1% inflation) pic.twitter.com/5xTWfBgBMo
But note the reference to 229,000 jobs in January and 290,000 in December. That's quite a bit less than the 353,000 in January and 333,000 in December that were reported in the previous jobs report. Which makes me wonder how this report would have been received if it was 108,000 jobs added and no revisions (which is the net change). Ironically, Wall Street probably woud have liked it more, since those numbers might have encouraged the Federal Reserve to cut rates sooner rather than later. On the flip side, the average increase of 265,000 jobs a month since December is the fastest 3-month growth period since last Summer. And while average hourly wages only rose by 0.14% in February, the average weekly wage rose by 0.44%, due to a longer average work week. That's the reverse of January's report, which had hourly wages up by 0.52%, but weekly wages were down by a little less than 0.1%. I also noticed that the strong growth in construction jobs continued in February, with 23,000 more jobs that month and 215,000 over the last year. It also contrasted with a loss of 4,000 jobs in the manufacturing sector, continuing a trend where hiring in manufacturing has mostly flatlined over the last 18 months even as construction keeps rolling along. The leading sector in US job growth continues to be health care, with more than 66,000 jobs added in February, and more than 720,000 over the last year. After losing sizable amounts of employees during the COVID pandemic, health care employment finally got back into its pre-COVID levels in late-2022. And since then, it's been a strong and steady rise up, as nearly a million more people are working in the health care sector than they did before the pandemic. To me, things are still in a decent place in the US job market in early 2024. Hiring continues, even if the pace is a bit slower than the boom times of 2021-early 2023. And while we should keep an eye as to whether unemployment keeps nudging higher, a 3.9% rate is still nowhere near a danger zone of recession. Wage growth is staying decent, and generally ahead of the rate of inflation (February was an exception for hourly wages...although not for weekly wages). Can't complain too much, but it also feels like things won't be as easy as they were. Suppose that's to be expected when things have been so good for so long, but that doesn't mean people haven't started to get used to it, and it'll be interesting to hear the spin if/when job growth falls to the 178,000-a-month pace that we had in the first 3 years under Donald Trump.The unemployment rate rose to 3.9% in February.
— Heather Long (@byHeatherLong) March 8, 2024
That's still low, but we need to watch this.
+334,000 more people were unemployed in February. The labor force (job seekers) increased by just +150,000.
Keep an eye on the unemployed number this spring pic.twitter.com/m3iibP5463
Wednesday, March 6, 2024
Updated "gold standard" jobs report show a big North/South difference in Wisconsin
Monday, March 4, 2024
New revisions show 2022's unemployment info as better in Wisconsin, with 2023 not as good.
Sunday, March 3, 2024
Construction's "cutback" in January isn't a big deal. And should be rebound in Feb.
U.S. construction spending unexpectedly fell in January as weakness in outlays on public projects more than offset a moderate increase in private homebuilding. The Commerce Department said on Friday that construction spending dropped 0.2%. Data for December was revised higher to show construction spending increasing 1.1% instead of 0.9% as previously reported. Economists polled by Reuters had forecast construction spending rising 0.2%. Construction spending increased 11.7% year-on-year in January. Spending on private construction projects gained 0.1% in January after rising 0.8% in December. Investment in residential construction rose 0.2% after surging 1.4% in the prior month.So is this a big warning sign for a slowdown in 2024? It doesn't seem like it to me. Almost all of the decline for January can be accounted for in a $3.2 billion drop in public highway and street spending, which followed a runup of nearly 14% in the last 3 months in that area of construction. So that seems like a breather and/or short-term slowdown due to the brutal weather in mid-January. Given that we've had a record-warm February (especially in the cold-weather states where construction usually is dormant this time of year), I would expect some of that seasonally-adjusted decline in January to reverse in the next month. We also saw construction in single-family home building continue to rise in January, which is a trend that we've had for 9 straight months at this time. And manufacturing construction continued its boom in January, which directly goes back to legislation that President Biden and Dems backed in 2022.
So I'd expect hiring to continue in construction for the February jobs report that hits later this week, and given that we are still seeing elevated spending for bridges and roads from the federal government in this year, I think this is going to stay strong at least for the start of 2024.Another month, another record high for US manufacturing construction!
— Joey Politano 🏳️🌈 (@JosephPolitano) March 1, 2024
Electronics manufacturing set a new record high in the wake of CHIPS Act incentives for semiconductor fabricators, and transportation manufacturing hit the highest level in 7 years amidst IRA EV incentives pic.twitter.com/LOVE8odLNH