Tuesday, March 26, 2024

Wis adds jobs in February 2024, and new revisions show faster 2022 and slower 2023.

Came down with a case of March Madness where I needed to travel out of state last weekend. But I'm in recovery now, and I noticed that while I was out, we got a Wisconsin jobs report for February.
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.

Wednesday, March 20, 2024

Powell, Fed soothe worries, and seem to understand that jobs and paying bills >>>> CPI at 2% vs 3%

There was quite a bit of nervousness around Wall Street and everyday investors over what officials at the Federal Reserve might say today. Not that there was any expectation of a change in the central Fed Funds rate, but they wanted clues as to when (or if) the Fed might start cutting rates from their 23-year highs.

The worries got elevated after a couple of reports from last week showed inflation has had a bit of a pickup from the sub-2% rate that it was running at the end of 2023. So Fed Chair Jerome Powell and the rest of the Open Markets Committee released their statement, in which they said....

And the response to that statement and Powell's 2:30pm press conference reiterating that guidance was...

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.
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

As gas prices have consistently risen in the last two months (some of it being seasonal, but some of it beyond seasonal), I've been keeping an eye on the oil markets to see where things may be going with this. And I can't say that this week's headlines are making me feel good.
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 gouging increase.

At the same time, I noticed that the last data we have goes through the 2nd week in March, and in 2020, that was the last full week before much of America began to shut down due to COVID restrictions. So let's do two things at once, and see how much gasoline was available and being used before the we went into pandemic mode, and how much we have today.

Even with gas usage going up in early 2024, consumption is still significantly lower than the peak usage that we were seeing in early 2020, despite more Americans working now than then.

In addition, despite some suspiciously-timed refinery shutdowns in our country the first quarter of 2024, gasoline is more plentiful in America now than in most of the last 10 Marches.

But yet we see Wall Street continuing to bet up oil and gasoline futures, which likely means that pump prices will go higher in the next couple of months. Which likely means an annoying INFLATION WATCH combined will continue through early Summer.

Because people are already likely to be unhappy about gas prices through the Spring, they may misdirect their rightful anger at a President and Democratic Party who will be facing the voters in 7 1/2 months. But it does seem that the White House is in an improved position to step in and bulk up our already-sizable supply of oil and gasoline.

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

Been out of town so can't write too much, but I wanted to give a quick rundown on the February US jobs report that came out last Friday.

If you look at the topline, the nunbers are an odd mix of job growth and higher unemployment.

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.

Wednesday, March 6, 2024

Updated "gold standard" jobs report show a big North/South difference in Wisconsin

Got the new, thorough figures from the "gold standard" Quarterly Census of Employment and Wages (QCEW) today. This includes all sectors of the US jobs market, and goes down all the way into the county level for all states, including Wisconsin.

In the numbers for our state, we had decent-but-not great gains in jobs between September 2022 and September 2023 - 27,736 total jobs added, a rate of slightly under 1.0%. What strikes me is the geographic disparity in job stats among Wisconsin counties. Most counties in the southern third of the state had gains, and some by quite a bit. But most counties in central and northern Wisconsin weren't doing as well, and many lost jobs.

Those areas in orange and red are many of the areas of Wisconsin that have turned toward Republicans in the Trump era, which sounds like a great example of the conditions that seed the White Rural Rage phenomenon that has been well-summarized in a new book by Paul Waldman and Tom Schaller.

But if you try to pin this as a Biden-era trend, you're missing that the same thing was happening over the 12 months that ended in September 2019, when Donald Trump was allegedly presiding over "the greatest economy ever".

And given that Republicans are apparently going to try to play the "are you better off than you were four years ago" card (vs 2020? Bold move there, Cotton!), let's compare to where we were in the pre-COVID times of September 2019, and where we were on September 2023.

Overall, the QCEW says the state has gained a little over 41,500 jobs between September 2019 and September 2023 (+1.43%). But some places have gained quite a bit more than 1.43%.

On the numerical side, stop me if you've heard this before, but Dane County's growth is nearly twice as large as anyone else's. Most of the other largest gainers in the state are in either suburbs/exurbs, or counties on the border of another state.

But we also saw more than half of the state's counties lose jobs over those four years. The highest percentage losses were in rural counties in western, central and northern Wisconsin, with the biggest drop in Jackson County, which shed more than 1 out of the 10 jobs they had.

However, those large % losses are in small-population counties. When you look at the raw numbers, Milwaukee County had by far the largest deficit in jobs out of all of the counties in the state. Down 18,680 jobs in the QCEW reports.

Maybe that whole "defund Milwaukee" thing that WisGOP used as a strategy to stir up MAGA voters isn't something that works out well for an economy (note how Ozaukee County is also on that chart). Maybe the new sales tax and added investments into the state's largest City could reverse the bad numbers on jobs in the area as well.

These new numbers illustrate that while the state is in better economic shape than it was 4 years ago, and continued to grow in 2023, there are places that have lagged behind. And just like how economic success often leads to more success and attractability for workers and businesses, lagging performance and job losses become something that requires a lot of effort to reverse. And Wisconsin lawmakers should be aware of the different outcomes and figure out ways to improve the laggards while keeping the good times going in the places that have been winning.

Monday, March 4, 2024

New revisions show 2022's unemployment info as better in Wisconsin, with 2023 not as good.

We received some updated unemployment data for Wisconsin dating back to 2019. These revisions tell an interesting story for Wisconsin’s recovery from the COVID cutbacks of 2020.

For 2019 and 2020, our losses and recovery from the pandemic's shutdowns and changes isn't much different - slightly higher labor force and employment (labor force up 11,300, employment up 6,200), and 2020's year-end unemployment rate went from 4.8% to 4.9%.

The last 3 years had more significant monthly changes. What was originally reported as a drop in both labor force and the number of Wisconsinites working for much of 2022 now has little change at all, and 2023's increases for both employment and labor force aren't as large. But we've mostly ended up in the same place today.

This also is reflected in revisions to the number of Wisconsinites that were out of work. The number of unemployed didn't fall as fast in late 2021 and early 2022, but it also continued to go down through early 2023, unlike earlier reports indicated. Likewise, the number of Wisconsin unemployed rose for most of 2023, before leveling off in November and December.

And the changes in the unemployment rate tell a similar story, with the low of 2.6% now being reported in February, with a slow but steady rise happening over the next 8 months as all 3 parts of the household survey went up, before flattening out and staying at a rounded 3.4% for the last part of the year (sitting at 3.35% for December).

This report also listed annual averages for unemployment and the employment-population ratio that measures how much of Wisconsin’s total population is actually working. And we are continuing the tradition of this state having a high amount of its people in the work force, finishing 10th out of the 50 states.

We had previously seen evidence of good population growth and migration into Wisconsin for 2022 and 2023, so perhaps that’s being reflected in the higher work force, with the majority of those people finding jobs. And maybe 2022 and 2023 marks some progress on the ability to balance child care and other home life stresses with the need for employees and workers in need of income, although we still have a ways to go.

Later this week, we will see how the payrolls side of the jobs data has been revised to account for new and more refined information. When I did a check of the Quarterly Census of Employment and Wages (QCEW) last week, I didn’t see much reason for a notable change either way.

We’ll see for sure on Thursday, along with what January’s jobs figures were for Wisconsin. But it indicates to me that we need to keep working to hold onto the gains we've had in the 2020s, and keep improving our competitiveness to continue to retain and attract people to what can still be a great state.

Sunday, March 3, 2024

Construction's "cutback" in January isn't a big deal. And should be rebound in Feb.

One item that finished up 2023 in a strong place was the construction industry, and we got a report on Friday to see how 2024 began.
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.