Since last June we have a lot of bears come out with new recession theories.
The unemployment rate is too low.
The Repo Man Recession
ISM under 50
Inverted Yield Curve
December jobless claims spike
This year a lot of negative headlines are surrounding the coronavirus which have merit in terms of the rate of growth should slow down. However, still not a valid recessionary thesis yet. The Boeing situation will impact growth but not a correct recessionary dissertation yet.
However, one that caught my eye, Job openings!
Last October, some of the bears went into overdrive due to the October Job openings falling.
Some of these people were stock traders hoping that the business cycle would end and they would get the glory of calling it early. Well, that didn’t happen.
People that had followed my work over the years know I love the JOLTS data but back at the end of 2014, when I started to downgrade my job growth forecast for years 2015 and on, I only estimated job openings peaking at 6,210,000.
What happened after that was even abnormal for me, and I believe I am the biggest economic expansion bull out there.
Today job openings at 6,400,000 don’t even make me blink.
“The number of job openings fell to 6.4 million (-364,000) on the last business day of December, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.9 million and 5.7 million, respectively. Within separations, the quits rate and layoffs and discharges
rate was unchanged at 2.3 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by
four geographic regions.”
The main reason it doesn’t make me blink because today, the job market is still outperforming my forecast. I have always had a lower job growth forecast than most people and believe I always will.
For 2019 I wrote:
In 2019 I was looking for job growth to slow noticeably, but still stay is a very healthy range.
“I expect job creation numbers to fall but stay in the range of 137,000 – 157,000 per month.”
We ended the year at 175,000.
For 2020 I wrote:
“I expect job numbers to fall to 98,000- 124,000 once you exclude census workers from the data. The job markets look very healthy.”
Bears be careful here. What you believe is the end of the cycle is still above my peak openings forecast. I understand the urge to start using dual-axis charts on twitter to try to show the end of the business cycle. However, my best advice for you is this.
Let openings get below hires and stay there for some time and then say the excess openings are out of the economy. Then with jobless claims at historic lows, now is the time to worry about wages eating into profits?
I mean, that is your game, right? You’re looking more at the corp profit cycle rather than the economics of the JOLTS data line. Wage growth has picked up on the low end for sure but not much on the middle and upper end. Just take deep breaths and think about what I am trying to tell you here?
I say this because what you’re implying here is that even though this data line is still historic in nature because openings never got above hires in the previous cycle, this time, it means something else.
Again, you’re too early bears, patience. If I were you, I would focus more on leading economic indicators, and housing starts than hope this is your salvation.
As always, compare this cycle to the previous one. I need to see openings below hires with more duration before I change my tune, and you’re out there using dual-axis charts to point to something that is still historic in nature because you’re avoiding hires on your charts.
Plus, if openings do get below hires, my first statement is that the excess openings have been taken away. You and I have a much different take on economics but who has won this battle for 11 years.
From Doug Short:
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 Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.