Confirming the economic expansion is unlikely to stop anytime soon, the U.S. economy created 187,000 net new jobs
Wall Street had been expecting the addition of 170,000 new jobs would be created in August, net of jobs lost. The level of job creation is just below the 200,000 monthly net new jobs created in the 11-year economic expansion before the Covid-19 recession in February and March 2020. It’s defied expectations in the face of the most aggressive Federal Reserve monetary tightening campaign in post-War history.
When summer began, roughly two jobs were open for every job seeker – a statistical anomaly caused by the large exodus from the labor force following the pandemic.
The hot job market cooled this summer. The excess demand for labor narrowed, heading back toward normalcy.
The number of job openings came down from 9.6 million in June to 8.8 million in July, a sign the tight monetary policy imposed by the Federal Reserve is curbing growth.
However, the number of job seekers grew from 5.8 million in July to 6.4 million in August. The growth in the number of job seekers is very good news. It means the labor force is growing.
The labor force participation rate collapsed during the pandemic, when the number of people who decided to retire surged after immigration had slowed.
The labor for participation rate is the number of employed plus unemployed as a percentage of the U.S. population age 16 and older. The uptick in August means more Americans are now in the work force. This is very good news, since they will be earning income, spending it, and, thus, growing the U.S. economy.
With the latest data on inflation coming in this past week in line with the Federal Reserve’s target range and the labor market strong, the stock market had a very strong week.
The Standard & Poor’s 500 stock index closed Friday at 4515.77, up +0.18% from Thursday, and up +2.5% from a week ago. The index is up +101.83% from the March 23, 2020, bear market low and only -5.85% lower than its January 3, 2022, all-time high.
With sharp gains in stocks in recent months, rebalancing and capital gains management is more important, and the tax outlook makes it prudent to consider converting assets to Roth IRA accounts before the end of the years.
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DPI up +7.2% y/y.
Personal outlays up +7.1% y/y.
The savings rate, at 3.5%, is below pre-Covid levels.
Spending down savings
Big week and positive week
More goldilocks
Stock mkt above 4500 which is encouraging
Halthy growth with cooling inf
Boosting spending rapidly and price press re,mained modest
Most recent monthl;y rate annualized
Slope of the red line is bending toward 2% dotted line
Ticked up from 3.5 to 3.8%
Bottoiming maybe.
The big picture takeaway here is that the ISM manufacturing PMI has historically slumped to a reading under 50 as the economy slides into recession. Also, note the historic volatility of manufacturing momentum within the (grey) periods of economic (GDP) expansion, suggesting that the index has also slipped well below 50 even as the economy has not slipped into recession.
5.6% in 3Q.
