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- Macro Monday: A Refreshing Beveridge (Curve)
Macro Monday: A Refreshing Beveridge (Curve)
The Macro Institute's Weekly Economic Primer
Last week provided a lot of U.S. labor market data, most of which showed a continued gradual softening of conditions and a return to something resembling balance between workers and employers. One of the ways we can measure this is through something called the Beveridge Curve, which plots the unemployment rate against the job openings rate. Anyone who has taken Economics 101 knows the difference between a shift ALONG a curve and a shift up or down IN a curve. For a while in the early 2020s, it looked like the number of job openings would simply remain higher in comparison to the level of unemployment. This would have meant that a fall in openings would have to have come with a large increase in unemployment. But that hasnโt happened. Instead, job openings have plunged with only a small increase in joblessness. The yellow dot on this graph represents the labor market as of April. Unemployment is 0.5% off its low, but its relationship to job openings is fully consistent with the Beveridge curve of the 2010s. Thatโs been a good thing, but even a normalization to the environment of the previous decade implies that unemployment will rise from here as job openings decline.
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Top Tweets From The Macro Institute
I've been around long enough to know that you never want to make too big of a deal about one data point. That said, ISM New Orders completely cratered in May. It does get revised at times albeit not a lot in the grand scheme of typical data series (it's existed since 1948).
โ Francois Trahan, MยฒSD (@FrancoisTrahan)
5:09 PM โข Jun 4, 2024
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โ Francois Trahan, MยฒSD (@FrancoisTrahan)
4:53 PM โข Jun 5, 2024
It's out there that the equity market's leadership has been narrow. How narrow exactly? Through the end of May, almost 2/3rds of stocks in the S&P 500 were underperforming the index in 2024. This is on par with last year, and a statistic only ever seen in the late 1990s.
โ Francois Trahan, MยฒSD (@FrancoisTrahan)
2:00 PM โข Jun 7, 2024
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