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Macro Monday: Mind The Employment Gap
The Macro Institute's Weekly Economic Primer
If the U.S. government is going to conduct two separate surveys to estimate the most closely watched economic indicator in the world, they should at least tell us roughly the same story, right? Apparently, that’s too much to hope for. Or, at least, it has been lately. The Bureau of Labor Statistics’ Household Survey, which estimates the size of the U.S. population and labor force, and is used to calculate the unemployment rate, has been dropping in recent months. In fact, over the past year, it’s shown a close to zero net increase in total employment. That’s a far cry from the Establishment Survey, which canvases employers to measure the total number of jobs in the economy. That figure has been increasing by more than 200,000 per month, on average, over the past year. What explains the gap, and which one is correct? Historically, when these surveys have disagreed to this extent, it has usually paid to give more weight to the Establishment figures. Over the past several years, with a large influx of immigrants into the United States, it has likely become more challenging to estimate total population growth and sort out how many people are working and how many are not. A failure to account for the rising share of foreign-born workers may explain the bulk of the divergence we’ve seen in recent months. Macro strategists must understand how the underlying data is calculated and presented in order to make educated decisions (sometimes guesses) about what is actually going on in the real economy. In this case, our best guess is that job creation has remained strong as the workforce has continued to grow over the past several quarters.
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We recently published a report outlining the 10 historical facts every investor must confront if they are currently bullish.
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— The Macro Institute (@MacroInstitute)
12:38 PM • Apr 2, 2024
When I first looked at this chart, I thought there was a data error in the underlying spreadsheet, but it turns out we really are that far off the map of the traditional relationship between Unit Labor Costs and Core CPI.
— Brian Nick (@bnick41)
5:10 PM • Apr 1, 2024
Hiring trends have changed. The NFIB Plans to Hire series is back to levels not seen in 10 years, and the JOLTS Private Hire Rate is behaving similarly. These are leading indicators of employment, and they are painting a very different picture for the second half of 2024.
— Francois Trahan, M²SD (@FrancoisTrahan)
11:34 AM • Apr 5, 2024
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