No Recession in Sight
Here’s a Tweet that caught my eye today.
This post on Change in Nonfarm Payrolls and Average Payrolls Change in U.S. Economic Cycle represents the entirety of the analysis.
These two lines are the entirety of the article (emphasis mine).
Nonfarm payrolls have averaged 184k the past 12 months, more than the cycle average of 170k. This does not happen in front of recessions.
Image: LPL Financial LLC
Really?
Where’s the Proof? Heck, where is the supporting evidence?
How about some recession bars?
How about any semblance of analysis to back up the claim?
It’s not even clear what the author means by “cycle average”.
All Employees vs Employment Level
Leading and Lagging Indicators
All Employees is from the establishment survey.
The Employment Level is from the household survey.
November Bounce
OK November bounced. Why?
The GM strike ended and there were additional seasonal factors as discussed in Jobs Surge in Strike-Ending and Seasonal Adjustment Rebound.
Manufacturing Blowout?
I dove further into the details with Trump Tweets “Manufacturing Blowout”: What’s the Real Story?
I presented six charts. Here the key one.
Manufacturing Average Weekly Hours Year-Over-Year Detail
GM Strike
The GM strike ended on October 25. And Thanksgiving was November 28, the last possible date, further skewing BLS job sampling.
Yet, there was no improvement in manufacturing hours of actual production workers!
2015 vs Today
The dip in 2015 was energy related. This dip isn’t.
This manufacturing dip is related to a global slowdown in trade enhanced by Trump tariffs.
What About Hiring Trends?
I am glad you asked.
Please consider Hiring Trends in Recessions by Size of Firms
Slump in ISM and Freight Traffic
Please note Another Recession Warning: ISM Contracts 4th Month
Also note Recession Warning: Freight Volumes Negative YoY for 11th Straight Month
No Recession?
Recessions are difficult to predict. I certainly provide ample proof.
But at least people ought to discuss the actual data instead of making baseless claims.
Correction
I originally stated “Employment is a very lagging indicator that peaks just ahead of recessions.”
Based on my charts as shown, a reader accurately corrected that assessment.
The charts show employment sometimes leads, sometimes lags, and sometimes is coincident. On average it is coincident.
But the charts reflect revisions that are in fact lagging. So the correct interpretation counting is likely coincident to lagging.
Mike “Mish” Shedlock
oh noooo socialism!! One of the poorest, most desperate regions in Appalachia is experiencing an economic miracle thanks to fiber run by a New Deal-era co-op https://www.newyorker.com/tech/annals-of-technology/the-one-traffic-light-town-with-some-of-the-fastest-internet-in-the-us
Without socialism we would not have the freeway system, gone to space, the internet
Have you ever looked up “logical fallacy?”
What the – seriously?
FWIW we would have to get huge job cuts in order to get a recession. Even 25k to 50k jobs per month wouldnt create a recession. We actually have a contracting working population in the US due to retirements so more jobs are becoming available and this counts in the jobs numbers. People learned from 2008 to get out at the top instead of getting greedy. The US economy has a better forecast than Japan due to demographics and sheer number of people that can work even with immigration contracting due to H1B visas not being renewed and less people coming on new visas. I use to be a doomer and gloomer about the US economy but slow growth is sustainable growth. We will likely get lower prices with it.
Need to keep an eye on this maybe.
https://fred.stlouisfed.org/series/SAHMREALTIME
Keep and eye on whatever you like. Near all time low interest rates are driving everything.
Job cuts do not “create recessions”. It is the other way around.
My point was that you would have to see a net loss of jobs to even have the probability of a recession being high. Canada had net job losses recently. I wouldn’t be surprised if they dipped into negative GDP but the trade deal will likely save them.
We will get back to 2013 or 2014 levels. I see 1% GDP for 2020 but no recession. A few Fed rate cuts will be needed to avoid a recession but we wont see back to back quarters of negative GDP ( technical definition of a recession).
Just keep predicting recession and eventually you’ll be right. How lame! Stand up and give a time frame. Without a when, you’re telling people nothing. Kind of like a weatherman in Chicago today that predicts a snowstorm. Without a when, they are sure to be correct.
Same in the UK. Record low levels of unemployment but a recent contraction in manufacturing and a retail sector on its knees.
Market patterns show a roll is imminent. Defensive sector etf’s show bullish patterns. Figure it out yourself…im talking weekly/monthly charts not daily bullshit/ Also xle has h&s pattern/ive been out and don’t really care, retired.. look for yourself
Regardless of the timing of indicators production workers hours are clearly back to a level of the last recession. That is a ominous sign
DOW 28,516 December 13, 2019 close.
The Fed has launched QE4. Assets are already responding by moving smartly upward and they are part of what defines is calculated as a recession/not recession. This suggests there will not be a technically statistical recession. For whatever it’s worth.
Correction
I originally stated “Employment is a very lagging indicator that peaks just ahead of recessions.”
Based on my charts as shown, a reader accurately corrected that assessment.
The charts show employment sometimes leads, sometimes lags, and sometimes is coincident. On average it is coincident.
But the charts reflect revisions that are in fact lagging. So the correct interpretation counting is likely coincident to lagging.
Re: “Employment is a very lagging indicator that peaks just ahead of recessions.”
That would make it a leading indicator with a very short lead time, or a concurrent indicator. A lagging indicator would peak after the recession has begun.
In unrelated news, here’s an amusing poll: