Before we go into the report, just a few takes.
Earlier this week on Bankrate.com, I talked about how we have at least 2-3 jobs reports that come in a miss a year. Today’s job report with the ADP reports both came in as a miss together. This isn’t the first time or the last that we will see this. Job growth did come at 235,000 with positive revisions of 134,000.
Those of you who follow my work, especially during the Covid19 recovery phase, know I am a big JOLTS, a job opening person. I have been tweeting JOLTS 10,000,000 for a long time, believing that we had short, medium, and long-term factors that should push job openings to 10,000,000 soon. We got that in the last job openings report, and I don’t believe a single person in the United States of America has this premise or was very vocal about this happening.
My approach with the jobs data is to get all the jobs lost to Covid19 by September of 2022 or earlier. At the end of September next year, I will see if I am correct or not. Part of this longer-term jobs call was based on the fact that I believed by the end of August of 2021, we would be in a better position to make a strong run toward that goal. Of course, the Delta variant isn’t the best backdrop and wasn’t something I had in mind when I thought of September 2022. However, Delta will be peaking soon, and just like surges 2 and 3 of Covid19, the economic data isn’t being impacted as much as we saw in March and April of 2020. Of course, some Americans won’t want to work during a virus surge, and we do have some areas of the country that deaths have been rising since Delta took off. However, in the bigger picture, it’s not March or April 2020. We have learned to consume goods and services with an active virus infecting and killing Americans each day. As crazy as this sounds, this is the reality we see in the data.
Remember, with jobs data; we will always get short and longer-term revisions.
February 2020 152,523,000
August 2021 147,190,000
From BLS: https://www.bls.gov/news.release/pdf/empsit.pdf
Total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate declined by 0.2 percentage point to 5.2 percent, the U.S. Bureau of Labor Statistics reported today. So far this year, monthly job growth has averaged 586,000. In August, notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month.
Here is the breakdown of the jobs gained and lost in this report.
From BLS: https://www.bls.gov/charts/employment-situation/employment-by-industry-monthly-changes.htm
From BLS: https://www.bls.gov/charts/employment-situation/unemployment-rates-for-persons-25-years-and-older-by-educational-attainment.htm
Unemployment rates for persons 25 years and older by educational attainment
Less than a high school diploma, 7.8%
High School graduate, no college 6.0%
Some college or associate degree 5.0%
Bachelor’s degree and higher 2.8%
Some of the government transfer payments will be ending this weekend. Still, the Savings Rate and income levels look healthy. Total Private earnings hourly are at $30.73
From BLS: https://www.bls.gov/charts/employment-situation/employment-and-average-hourly-earnings-by-industry-bubble.htm
Still, we are early in the economic expansion. Next year we should get some fiscal stimulus spending. However, even without that, our household formation economics really showed its muscle during this brief recession and fast recovery. As long as you weren’t stuck in 2008 mode, you would have been fine. We have many things going on with the economy; transfer payments will end, Delta variant, landlords will be able to evict their tenants, and rent inflation pick up. You can see this in the confidence data.
Note: We had a major decline in confidence with the previous expansion’s debt ceiling drama. In a time when short-term events fade, confidence should rise. Rent inflation is another story altogether, mother demographics are providing the demand, and rents are going up.
The leading economic index, which bottomed out in April of 2020, has still been rising. I stress as long as you weren’t in 2008 mode, you would not have missed this recovery as the signs of the recovery came early.
April 7th, 2020, the 10-year yield is currently at 1.32%.
More on this topic here https://loganmohtashami.com/2021/07/23/did-the-recession-end-in-april-2020/
The St. Louis Financial Stress Index, a key variable in America Is Back Economic Recovery Model is bored currently; we won’t be able to stay at these calm levels forever, so keep an eye out here. As always, know the components.
Currently at -1.0031 : The Black Line Is Zero, which is considered to be normal. It’s rare historically to be below -1.000%; this index was created in 1993
The 10-year yield after the jobs data did drop quickly, but yields backed up to 1.32%. Not much is going on here. Until the 10-year yield breaks over 1.94% or below 0.62%, try not to read too much in it. This range was my forecast range for 2021.
We are one stock market correction away from having the 10-year yield under 1%, don’t freak out when that happens, stock traders talk a lot of trash about the economy, but they’re always net long. It is what it is; if you don’t believe me, ask them for their returns, they will prove it. They all made money. They’re mostly all net long the markets. Ok, maybe they didn’t pull off a 300% + year in 2020 like I did or up 180% YTD but still!
The key to remember, it’s early in the economic expansion.
One last reminder, I won’t be writing my housing articles on this blog anymore. You can find all my housing work on HousingWire.Com https://www.housingwire.com/author/logan-mohtashami/. I will be providing economic updates on my blog. I will also be speaking in Frisco, Texas, this coming September 28th at the 2021 HousingWire Annual Event.
Logan Mohtashami is a Lead Analyst for Housing Wire, financial writer, and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami, now retired, spends his days and nights looking at charts and nothing else.