Jobs Day, March 2024

This was a strong report, and both surveys were aligned. Payroll employment grew 303K in March, with +22K net revisions. The 3M mov avg is now +276K.

Household employment grew 498K, and by 352K on a payroll basis (the household survey has far wider error bands).

The Producer Price Index (PPI) is always a difficult release to interpret. CPI and PCE are better measures of consumer prices, (though the latter takes some subindices from PPI); for example, CPI and PCE include imports and housing, both of which PPI exclude. /1 That said, PPI is no slouch on interesting data.

Contrary to the way it's often described, the headline PPI measure (PPI Final Demand) is *not* an input cost index. It's an index of seller's final prices. But PPI *does* have input cost indices, called "Intermediate Demand":

Jobs Day, February 2021 Misclassification may have pushed the unemployment rate to be up to 6.7% rather than the official 6.2%.

I'd like to delve a bit further into my Twitter thread from yesterday, both to explain why what the Fed is communicating here is interesting and valuable right now, and also to explain more why it runs into trouble over longer periods. /1

https://twitter.com/ernietedeschi/status/1363949305816580104

First, for background on how the Fed is communicating alternatives to the headline unemployment rate, read this nice @jeannasmialek piece from the other day. /2

https://twitter.com/jeannasmialek/status/1363915202316632067

Jobs Day: January 2021 Oof, -159K in normal 2-month revisions (separate from the annual benchmarking adjustments which also got folded in the data).

Ugh. Jobs Day, December 2020

Canada and the US were the two most generous advanced countries when it came to direct aid (Germany's fiscal response looks bigger on paper, but the vast majority of it was just in the form of loan guarantees or other non-direct aid). /1

https://twitter.com/snoble/status/1342546813895598080

Canada gave the equivalent of USD $1,560 per month to its jobless workers through the CERB program, *in lieu of* their version of UI (which they call EI). This went until October. Since in theory you weren't supposed to get both EI & CERB, CERB shouldn't have counted as EI weeks.

Here's a pre-buttal on some takes we're sure to see on this new stimulus package:

1. Stimulus checks are only around 1/5 of the total bill.
2. UI in America typically pays around 50% of pre-layoff wages, though it varies. With this extra $300/week, that will be ~85%.

1/X 3. If you're unemployed, you get an extra $1,300 per month through mid-March. If you're a gig worker or been out of work since early 2020, that's on top of having your UI benefits extended.

2/X

Jobs Day, November 2020 The good news is: payrolls grew. The bad news is: payrolls only grew +245K when we still have a ~10 mil jobs gap. At that pace it would take until the end of 2024 just to get back to where employment was in February.

We all hope & expect jobs will reaccelerate, but this is weak

As a reminder, my base models, which use Homebase, Kronos/UKG, & UI claims data, are pointing to a -515K to -228K seasonally-adjusted decline in nonfarm payrolls for November tomorrow (-198K to +93K non-seasonally-adjusted).

One more attempt at kicking the tires... /1

https://twitter.com/ernietedeschi/status/1333992271381991424

Homebase, in a report published this week, showed how their index performed last year. As you can see, there were declines between October and November last year as well.

In fact last year's Oct-Nov decline was -4%; this year it's -3%, a bit *better*. /2 joinhomebase.com/wp-content/upl…

Ahead of the ADP release at 8:15am, a brief thread on what high-frequency private data is suggesting we'll get for November payrolls, why it might be right, and why it might be wrong. /1 Note that I've augmented my high-frequency payrolls model to more explicitly address autocorrelation. /2

The latest UI claims, Homebase, & Kronos numbers are consistent with payrolls coming in at -67K not-seasonally-adjusted for November, and -386K seasonally-adjusted. There was a "pop" in the latest week of the Kronos data, but 1) it was the week after the reference week, and 2) because Kronos allows its sample to change over time, it may reflect new customers rather than employment changes at existing ones.

🚨🚨🚨
A slew of recent data is consistent with slow or even negative jobs growth in November. A quick thread. November is typically a month when we expect raw, non-seasonally-adjusted employment data to *strengthen* (due, among other things, to hiring up for the holidays).

So when the unadjusted data is weakening or shrinking in November, that's an especially bad sign.

Initial claims rise modestly week over week, were ~1.1 million last week. The recent declines in regular UI recipients, properly including the extended PEUC and EB programs, may be slowing.

On the one hand, the US recovery so far has been durably positive & modest

On the other hand, b/t the COVID surge, the cold winter weather, exhausted household savings, the end of moratoria on student loans/foreclosures/evictions, & UI expirations, we're piling on a lot of risks

https://twitter.com/ernietedeschi/status/1329050007358599170

And add on the risks of business closures & state/local cuts. There's a lot that can hurt us economically between now and wide vaccine distribution.

#CPSMicrodataDay The good news is that the rate in which employed workers are going directly into *permanent* layoff has fallen, though is still elevated [left].

The bad news is that the rate at which already-nonemployed workers are *becoming* permanent layoffs is high and rising [right].

The benefit cliff on December 31 is an economic setback when we least need one -- the winter months when businesses in many of the areas of the country will have a harder time staying open -- not to mention devastating for the affected workers.

https://twitter.com/byHeatherLong/status/1326882527823474689

Unlike the 7/31 expiration of the emergency $600/week FPUC, which was larger in aggregate dollar terms than this cliff, the 12/31 cliff will cut a deeper wound, because for many workers they won't get *any* aid after expiration; they still got base benefits when the FPUC expired.

Jobs Day, October 2020 The good news is: we're still adding jobs. +638K would be a gang-busters report by pre-COVID standards.

The bad news is: those standards don't apply now. We're only half dug out of our hole, and each month's pace of jobs growth has been slower than the last since July.

Let's not lose sight of the fact that while claims are decelerating, there were still *2.2 million* people applying for regular or PUA benefits *last week* But the data gets trickier and tricker. Initial claims are gross inflows, and we can see those clearly. But there are also gross outflows; we know that because we learned that net continuing claims among all federal and state programs fell by -662K between May 16 & 23.

A few quick and dirty #CPSMicrodataDay charts, as I ponder other ones. According to the household survey, broad labor market disruption fell by 8 million people in May, but there are still 32 million people who have left jobs or had their hours involuntarily cut since February. /1

Interestingly, no change in long-term NAIRU in the SEP. Still 4.1%. And the long-run policy rate remains 2.5% nominal / 0.5% real as well.