As we speak’s jobs information was dynamite. Not solely did the US add a forecast-smashing 517,000 jobs in January, December’s determine was revised up, the unemployment price fell to three.4 per cent — the bottom since 1969 — and earnings are rising at a 4.4 per cent annual tempo.
Revisions are in all probability coming. As Oxford Economics’ Ryan Candy notes:
The surge in job development in January overstates the energy within the job market as employment development in January regularly surprises to the upside and doesn’t warrant any change to the change to the baseline forecast.
It’s additionally doubtless that 2Q22 payrolls grew slower than initially reported, as Barclays identified this week. Nonetheless, immediately’s report principally paints an image of a US economic system nonetheless buzzing properly alongside. Which is odd, as a result of a lot of folks stated that the US was going through a recession final yr, or was already in one. The Heritage Basis even dubbed it “Biden’s Recession”.
The US’s GDP did decline for 2 consecutive quarters final yr, the standard definition of a recession. However even when the roles market was weaker than initially reported in 2022, the most recent information exhibits that weak point was shortlived. And the Nationwide Bureau of Financial Analysis hasn’t made an official recession name.
Final yr, alternatively, recession vibes have been nearly off the charts. Listed below are Google searches for “recession” exploding, surpassing even the Covid-induced peaks of 2020 and the worldwide monetary disaster in 2008.
The media, as is its wont, didn’t assist:
Family confidence, naturally, slid by means of the yr (though inflation might have been a much bigger issue right here):
Even CEOs appear to purchase into the recession narrative. Listed below are mentions of “recession” in earnings calls, which spiked in early 2021 and remained remarkably widespread by means of that yr and 2022.
Are we jinxing issues? Fairly probably, and if the (extremely seen) tech sector is something to go by, some firms are starting to search out method to reduce — even when that isn’t translating into the headline figures.
It’s definitely too early to name a ‘comfortable touchdown’. What’s sauce for Joe Biden is . . . not sauce for Jay Powell and the Fed, who should be worrying concerning the inflationary threats from a good jobs market.
All this week, FTAV’s inbox has been full of commentary about central banks lastly turning a nook on tightening. However what lies past is unknown.