Rick Rieder Profile picture
Mar 10 17 tweets 9 min read
Today’s #JobsReport was very solid, but like is often the case in the movies, it’s very hard for the sequel (today’s report) to match such an unexpected hit (January’s revised 504,000 jobs gained).
Still, a nonfarm #payroll gain of 311,000 jobs is quite good and having 815,000 jobs created so far this year after the #economy has already created 12 million #jobs over the past two years is pretty amazing in its own right.
Further, the 3-month moving average of 351,000 jobs, after a 12-month moving average of 362,000 jobs gained per month is also pretty remarkable, particularly after the market-implied pricing of the terminal #FedFunds rate has move up 500 basis points (bps) in a year.
The #unemployment rate increased to 3.57%, which is just about its average level over the past year, but remains impressive after such #policy execution…
…including an ending of quantitative easing (#QE), the beginning of balance sheet runoff, a massive set of #RateHikes and an extraordinary #fiscal tailwind (post-Covid) that has turned into a current drag.
We have described how certain segments of today’s #LaborMarket remain very much unfulfilled, as for example in the many service-oriented roles, such as those in education, #healthcare, leisure and hospitality. Image
We are still arguably several hundred thousand #jobs below trend in these industries, with many companies and #businesses still struggling to locate adequate levels of labor.
One of the key dynamics at play in the #economy today, which we continue to suggest is very relevant, is that many of these areas (and hires) are less subject to #interest rate sensitivity, or broad #monetary policy (e.g., healthcare and education)…
…than the historically more cyclical sectors, such as #housing and vehicle production, which require interest rate-based #financing for sales.
Wages slowed some today, but also reflect a solid labor #market. Average-hourly-#earnings growth rose a modest 0.24% month-over-month.
The year-over-year rate of 4.62% is likely to decline in the months ahead, and overall labor #income slowed sharply from January’s torrid pace, given the slowdown in the growth of total hours worked.
However, production and non-supervisory #wages were stronger (up 0.46% month-over-month), and in general, #services sector wages held up better today than goods sector wages.
Hence, today’s report was impressive, but a sequel a bit less nail-biting than the original. That almost had to be the case after the recently jaw-droppingly high payroll numbers of the prior few months.
The #Fed needs to see more evidence of reduced demand for labor to develop a more confident read on the influence of more restrictive #MonetaryPolicy biting into income, consumption demand and consequently #inflation, and particularly the sticky-high service inflation.
Still, today’s data only provides very limited comfort, and gives no indication that the #Fed can slow its rate #hiking cycle quite yet.
Furthermore, with the #banking industry recently suffering a jab to the jaw, and #markets consequentially adjusted the pricing of Fed hikes based on the potential of greater #FinancialStabilityRisks
…we need to keep in mind that the #Fed’s other unofficial mandate has been the maintenance of financial stability.

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More from @RickRieder

Mar 8
In testimony before #Congress yesterday, @federalreserve #ChairPowell unsurprisingly displayed resolve that the central bank’s fight to return inflation closer to its 2% target is unfinished and that the historical record suggests that relenting too soon would be a mistake.
Chair #Powell signaled more rate hikes and a higher terminal rate than previous #Fed projections, and an openness to adjust the pace of rate hikes depending on the totality of the data.
With the strength recently witnessed in the #LaborMarket data, in various #inflation measures and in #economic growth readings more generally, this resolve by policymakers would seem to be not only required, but critical to returning inflation to more normal levels.
Read 9 tweets
Feb 14
In the big picture, today’s #CPI data displays continued slow progress toward a lower y-o-y rate of #inflation, having come down from a cycle peak of 8.9% in June 2022 to the 6.4% reading today, at the headline level, which is the lowest 12-month inflation gain since Oct 2021.
That is clearly encouraging, and in a lot better place than we had become used to in the Fall, which was at the center of the disappointment for the @federalreserve. However, like bridges during periods of traffic, progress can come with some slowing along the way.
For three straight months we saw essentially flat readings for #CoreInflation (ex-shelter), for an average level of 0.08%, yet this month we saw it move up to 0.2%.
Read 11 tweets
Jan 6
Today’s #JobsReport was a clear indication that #LaborMarket dynamics are softening. For example, the 3-mo. moving average of nonfarm #payroll growth sits at 247k jobs, after a higher-than-expected print of 223k jobs for Dec, in contrast to 2022’s average mo. #job gain of 375k.
We have witnessed a marked deterioration in temporary help services in recent months, and a slowing in #wage growth in December, which both highlight the relative slowdown in the labor #market overall, even as the #services sector remains quite buoyant.
Yet, while the softening trend is clear, and the momentum of #hiring is slowing in a significant way, it is equally clear that we are far from what could be described as a demand-reducing weakening of #labor and #wage conditions.
Read 16 tweets
Dec 13, 2022
The November #CPI report is notable in part due to the fact that it displays the second consecutive month of more moderate price pressures, providing some signal that the underlying trend of #inflation is decelerating.
Turning to the data, #coreCPI (excluding volatile food and #energy components) came in at 0.2% month-over-month and rose 6.0% year-over-year.
Meanwhile, #headlineCPI data printed 0.1% month-over-month and came in at 7.1% year-over-year, with declines in #UsedCars, medical care and airline fares contributing to this result. Still, both #shelter costs and the food index rose significantly.
Read 14 tweets
Nov 4, 2022
Earlier this week the @federalreserve raised #policy rates at an extraordinary 75 basis point increment (its fourth time doing so this year), in an attempt to moderate excessively high levels of #inflation.
Still, if the central bankers were hoping to see signs of slowing in the persistently solid #LaborMarkets, as an indicator that policies were slowing growth and in turn #inflation, they may be somewhat disheartened by today’s data.
Indeed, nonfarm #payrolls increased by 261k jobs in Oct, with private employment rising an average of 262k/month over the past three months, which does not yet imply that the slowing that policymakers believe we’ll need to see to tame #inflation has arrived.
Read 16 tweets
Nov 2, 2022
The @federalreserve’s #FOMC has now moved in 75 basis point increments four times this year to get to a sought-after #policy destination very quickly.
Yet, the destination seems to have moved further away with each subsequent elevated #inflation print, and with #employment in the country remaining very tight.
Hence, while moving the #FederalFunds rate at a very fast 75 bps increment seemed almost inconceivable several months ago, especially as the #Fed was still undertaking quantitative easing (#QE) in March, we have become used to this extraordinary increment.
Read 15 tweets

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