Longest Job Expansion Continues: 85 Months

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Today the Bureau of Labor Statistics reported jobs data for October 2017. Payroll jobs grew at 261,000  We saw positive revisions of 90,000 to the data reported for prior months as well which means the longest job expansion streak continues.  USA!

From BLS: https://www.bls.gov/news.release/pdf/empsit.pdf

“Total nonfarm payroll employment rose by 261,000 in October, and the unemployment rate edgeddown to 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in food servicesand drinking places increased sharply, mostly offsetting a decline in September that largely reflected theimpact of Hurricanes Irma and Harvey. In October, job gains also occurred in professional and business
services, manufacturing, and health care.”

85… As in 85 consecutive months of jobs growth, by far the longest streak in history.

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For 2017, I made this prediction for monthly jobs data:

“In fact, for 2017 I am lowering my job creation numbers again ( 3rd straight year of decline) to adjust for tightening of the labor market leading to a lack of labor force growth.”

“However, look for job creation numbers monthly to come down to 140K-170K a month ,to account for labor force growth.”

https://loganmohtashami.com/2016/12/31/2017-housing-economic-predictions/

Today, after 10 months, we are running at 168,500 jobs created monthly. Since we need to print 80,000 -100,000 new jobs to match population growth, these numbers look, healthy and good to me.

Holy Unemployment Rate BatMan

5.7% unemployment rate for high school drop outs a 21st century low and for college grads a 2% unemployment rate

From BLS:  https://www.bls.gov/charts/employment-situation/unemployment-rates-for-persons-25-years-and-older-by-educational-attainment.htm

Nov education and Jobs

For some time I have talked about the U6 unemployment rate floor being  8% and that we would hit that number this year.  The report today shows the U6 to be at 7.9%

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2017/11/03/october-jobs-report-261k-new-jobs-september-revised-up

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Below is a  breakdown  by sector for the jobs created last month:

 https://www.bls.gov/charts/employment-situation/employment-by-industry-monthly-changes.htm

Nov Jobs Break down

And here is the breakdown for wages by sector:

https://www.bls.gov/charts/employment-situation/employment-and-average-hourly-earnings-by-industry-bubble.htm
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Some may recall that I warned about a negative print in the previous jobs report on a facebook live event and then noted that we could see a positive revision. We will get another more revision in the next job’s report that should show that the job creation streak continues.

On another note, we have a shot at reaching 3% total GDP for this year. We have had 10 prints above 3% in this economic cycle.  Breaking down those numbers,  1 print over 5%, 3 prints over 4% and 6 prints over 3% with two of them being at 3.9%,  in this cycle.

In order to hit 3% total GDP for the year,  we would need to see a 4.7% GDP for Q4 with no negative revisions. That is a big ask but not out of the realm of possibility with how ISM data is looking and the hurricane impact.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2017/10/30/visualizing-gdp-an-inside-look-at-the-q3-advance-estimate

Q3 GDP

For 2017 we must remember that even if we do have a 3% total GDP print this year, job growth is slowing and the deficit is rising. A deficit neutral budget in these circumstances, is just a dream. Our demographics (growth of Americans ages 65 +, which is just in its early stages) and military spending, means we cannot have a deficit neutral budget for decades.  The reality is that we could see a 1 trillion deficit in 2019, even with a continuing economic expansion. Republicans and Democrats alike need to admit  that “deficit neutral” is a fantasy and an unnecessary one.  The U.S. can’t run out of dollars. Currency induced inflation doesn’t happen to every country. Japan’s for example has a ratio of debt to GDP that is more than twice that of the U.S. and they are borrowing at negative rates.

2017 Budget
From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2017/11/02/a-perspective-on-secular-bull-and-bear-markets

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Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing marketLogan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page https://www.facebook.com/Logan.Mohtashami