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“Want A Job Now” Still Hasn’t Turned
In early December I wrote about an indicator I have been watching to see when a bona fide turn in the underlying employment situation has occurred. It measures the number of people who are not in the labor force but who nonetheless want a job. This is sort of a “supply overhang” in the labor market, and that overhang is still causing a hangover. As the chart below (Source: Bureau of Labor Statistics) shows, the industrial reserve army of the unemployed is still growing.
Not In Labor Force, Want A Job Now
This will keep the Unemployment Rate elevated in the same way that the supply overhang in housing will keep prices from rising very much: as the situation starts to improve, this shadow supply will come on the market, joining the labor force initially as unemployed people.
Labor is a lagging indicator, we have been told a hundred times. But the Fed cares about the Unemployment Rate – so this continues to push off the date of first tightening.
Westpac Wins Closest-to-the-Pin
James Shugg of Westpac Banking Co was the closest, at -80k estimate, to the actual Payrolls number of -85k (among surveyed economists at Bloomberg). It would be neat if firms had an “Employment pool” like traders and salespeople at many investment firms do: each firm puts up $1k and the winning economist gets the pool. Although, come to think of it, that wouldn’t work…the strategy to maximize your expected winnings is not necessarily the same strategy to minimize your forecast variance. It would be fun though.
