The 11 Month Job Push Continues

Today the BLS reported 531,000 jobs were created a beat from estimates; we also did have 235,000 in positive revisions to the previous jobs report. The unemployment rate is currently at 4.6%. For men age 20 and over, it stands at 4.3%, and for women, age 20 and over, it is at 4.4%. My premise is that we should be able to get all the jobs lost to Covid19, but that should occur by September of 2022 or earlier. Job reports can be wild, and we often have 2-3 reports per year that miss estimates badly. However, be mindful of positive revisions and know that we have over 10,000,000 job openings. The trend is your friend here.

From BLS:

From BLS:

During this recovery on my social media outlets, a big theme has been my JOLTS 10,000,000 well before this data line spiked higher. Don’t forget, aging and death are powerful economic forces. No country has a Dorian Gray Labor Market, and the trend was your friend with this data like since 2010.

We still have a lot of work left, but we have the suitable backdrop now to get all the jobs back that we lost to Covid19 by September of 2022 or earlier. 

Today – 148,319,000 jobs
Feb 2020 –152,553,000 jobs
4,234,000  jobs left in 11 months
384,909 jobs per month
4.6% unemployment rate

The job gains and losses today.

From BLS:

Here is a breakdown of the unemployment rate and educational attainment for those 25 years and older. Remember, it’s always about prime-age labor force data ages 25-54. Most people are always working; the lower portion of the educational and skilled attainment population tends to have a higher unemployment rate. This is why I created the #ATighterLaborMarketIsAGoodThing. We want to have college-educated unemployment rates for everyone! Trust me, we have tons of jobs that don’t need a college education or a particular required skill set that a functional human being has. 

Less than a high school diploma, 7.4%
High School graduate, no college 5.4%
Some college or associate degree 4.4%
Bachelor’s degree and higher 2.4%

When I wrote the AB recovery model, on April 7th, 2020, which was retired December 9th, 2020, I needed one thing to happen in 2021. While I believed we needed to see the 10-year yield head back to 1% in 2020, the real goal was to create a range between 1.33% – 1.60%. That could not happen last year but was a must for this year. 

Even with the Taper talk, even with the better than expected jobs number today!
10-year yield = 1.47%. We recently hit that 1.60% level and bonds started to rally, nothing abnormal here. In fact, everything looks just right to me. The 2021 10-year yield forecast range was 0.62% – 1.94%.

Isn’t this one of the most beautiful looking charts ever!
For me, at this stage of the expansion, I am closely tracking the 2-year yield. Once the two-year yield can close above 0.56% and stay up! Then, and only then, let’s talk about the Fed First Rate Hike. Until then, it’s still yawning in bed. Currently, the 2-year yield is at 0.41%.

For more on the AB recovery model and the entire journey from then to now, this podcast interview from Bill Brewster goes over everything; I mean everything! This interview was recently done.

The economy is early in its economic expansion, which very soon I can move off this line of thinking. However, some of the data will moderate. Retail Sales are booming in a deviation from historical trends that have never been seen in recent economic history. Learn to not freak out when hot data moderates, for some of you this is a new thing because economic data has never been this wild. Also, the recent ISM service data just hit an all-time high.

Transfer payments that boosted incomes and savings during the Covid19 crises have run their course, so we fall back to demographic consumption economics or back to normal again. I know we have some child credits and a fiscal spending bill that will pass soon. However, fall back on consumption always for economic expansion work.

From AdvisorPerspectives:

Don’t forget that the low bar that housing had from 2008-2019 is no longer here in 2020-2024. Typically housing starts to fall before every recession. Covid19 was unique as Feb 2020 housing data broke out for the first time since 2008 in a meaningful matter. In traditional economic cycles, housing starts, and new home sales falling is a recession indicator. 

The Leading Economic Index is still healthy; when this falls 4-6 months, let’s talk about this data line with more urgency. Note: A lot of economic data will moderate, so you’re going to have learn how to read reconciling high-velocity data early in an expansion.

The St. Louis Financial Stress Index is still calm at -1.0052, zero is normal stress. We haven’t had a real 10% stock correction since the lows in March 2020. It won’t be like this forever, so be mindful of that reality.

For fun, I am always trolling my wonderful stock trader friends who hide behind fake names, saying the economy is terrible but never showing their stock returns. As some of you know, I retired last year, up over 300% in 2020, and this year YTD 148.56%. My thing is that bearish stock traders are always net long the market. They talk a lot of trash, but they’re always net long the markets, especially early in an economic expansion. 

One final note before we all enjoy the weekend. As you have noticed, I no longer write about housing on my blog. All my work can be found on HousingWire Plus; as you know, I am very detailed about my housing economic work and believe I have done an admirable job of explaining to people why economic models work, especially in Housing. What has happened in 2020 and 2021 hasn’t been a surprise to me. If you want to join HW plus, use my loganvip50 code for a discount, it will give you access to all HW plus content. I no longer can do public speaking, zoom, or podcast interviews without approvals either; they have locked me up, folks. However, this week, I did a podcast interview on HousingWire about the Zillow situation. I talked about mortgage rates where I believe I will be in the minority again with my call. Enjoy the interview and the weekend!

Don’t ever forget this theme of mine as well! Wink Wink!

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