Inversion Recession Job Bears Becareful

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For 2019 I predicted this:

“I expect job creation numbers to fall but stay in the range of 137,000 – 157,000 per month.”

https://loganmohtashami.com/2018/12/29/2019-economic-housing-predictions/ 

My job growth forecast has always been lower than most people. So I wasn’t shocked to see the recent BLS revision to the job gains go negative. Unlike some people, I don’t believe we have a vast pool of unlimited workers sitting at home since 1945 waiting to come back to the workforce.  I love the fact that we are debating if we are at full employment with this record job expansion. If you really had a first world problem, this is it. We are in uncharted territories with some of the job data, so hopefully, we can keep this record job expansion going for many years to come.

Today’s number still shows that we are beating my estimates.

3 months’ average is running at 156,000, which is at the high-end range of my 2019 forecast. If you X census private pay payrolls are at 150,000.

The year to date is running at 158,250. 

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

Total nonfarm payroll employment rose by 130,000 in August, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment in federal government rose, largely reflecting the hiring of temporary workers for the 2020 Census. Notable job gains also occurred in health care and financial activities, while mining lost jobs.

However, instead of writing about the job numbers today. I want to give a heads up to my bearish friends because I can see what will be an issue for them going out.
There is a difference between lower job gains due to recessionary trend vs. smaller job gains due to a tighter labor market.

Job openings data is not showing any stress what so ever. In fact, job openings vs. hires still have a big gap. This is something we didn’t even see during the housing bubble years. Let the openings move closer to the hires before you get all job loss recession on us.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2019/08/06/job-openings-labor-turnover-clues-to-the-business-cycle

JOLTS total August

Unemployment claims are ridiculously low compared to the civilian labor force. I believe we have enough data to show that we are clearly forming a bottom here. But don’t get too excited about your recession if we first make a noticeable move higher. We need to see a lot of conviction in this data line before we chant recession, recession.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2019/09/05/weekly-unemployment-claims-up-1k

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Regarding the inversion, we recently had.  At the end of 2017 for my 2018 prediction article, I forecast this

“I am also looking for yields to invert in 2018.”

More critical I said this late in the prediction article

“I believe we will see an inversion in 2018, but it won’t mean a recession soon. It would be the longest time before the first inversion to a recession ever in history if we inverted in 2018”

https://loganmohtashami.com/2017/12/31/2018-economic-housing-predictions/

I have never strayed once from my own belief that we inverted the yield curve last December. In fact, I took it off my list of recession flags that need to be raised before I can say the R-word. We actually got the rate cut before the actually 2/10 inversion. However, this does not mean a recession in 2019, 2020, or even 2021. We have other data lines that we need to focus on as a financial community, and we owe it to this nation to do a better job of talking about an impending recession.

More on my model and mindset here: Is the Inversion Calling For a Recession

https://loganmohtashami.com/2019/08/28/is-the-inversion-calling-for-a-recession/

I know it is the hip cool thing to call for a recession every 7th hour, and I know the American bears are hungry for some recession blood. However, not just yet, this country still has some fight left in it.

Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan 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