Moody's Talks - Inside Economics - Employment, Earthquakes, and the Eclipse

Episode Date: April 5, 2024

The March 2024 jobs report was picture perfect. Cris thought he had found a blemish in the numbers, but on closer inspection, not so much. Dante and Marisa explained how the economy could create so many jobs without fanning wage and price pressures. Think foreign immigration. And like stock investors, Mark found plenty to like in the report.  Follow Mark Zandi @MarkZandi, Cris deRitis @MiddleWayEcon, and Marisa DiNatale on LinkedIn for additional insight. Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Sandy, the chief economist of Moody's Analytics, and this is Jobs Friday, the day we got the job numbers for the month of March 2024. And as per the tradition, we've got three of my colleagues, two co-host, Chris DeReedies and Marissa Dina Talley. Hi, guys. Hi, Mark. Good morning. Good morning. Good morning. And Dante, Dr. De Antonio. Hi, Mark. That just kind of rolls off the tongue. Dr. Dante D. Antonia. The triple D. There you go.

The triple D. And you know, we all have the D's in our last name here. Oh, yeah, all the Ds here. We got all the Italians here today. All the Italians. And everyone thinks I'm Italian, but I'm not. Everybody wants to be Italian. I should be.

I'm not, yeah. But the big news, though, is the earthquake. We just had a bit of an earthquake over here on the East Coast. And Dante... I think it's news. You don't think it's news? Marissa doesn't think it's news. Oh, yeah, being on the West Coast.

No, I'm happy for you guys. That's great. Well, can I ask Marissa, what's the biggest earthquake you've been in? I don't know what the magnitude was. I think it was like five something. Five something. Which doesn't sound big, right? But it was quite scary.

I was, I was, it was at night. I was at my sister's house. I was babysitting my nephew who was, I just put him to sleep. He was like two years old. The whole house just started shaking and the floor was, I remember I stood up and it felt like I was on water. You know, like it was like going like that and he started screaming. Like, what's going on? My room's shaking.

And I ran upstairs and his bedroom was shaking. He had the ceiling fan over his crib. that was like swaying back and forth. I was terrified. It was going to fall. I mean, and that wasn't even that big of an earthquake in the grand scheme of things,

I think. I think it was five point something, and the epicenter was, you know, way, way far north of me. Huh. How long do earthquakes typically last?

Is there a typical length of time? I mean, it's seconds, right? But it feels, when it's like that, it feels really long. It was probably 10 seconds

or something like that, but it felt like, a minute. Right. Do you know? That was, that was probably six years ago, and that's the last time I felt an earthquake here. What's the average length of time for an earthquake? I've never even asked myself that question. Is that like a reasonable question? Let's ask chat GPT. Yeah, yeah, I've been really curious. Yeah. Anyway. So you guys didn't feel it. I didn't feel a thing. I didn't. But Dante's wife did, apparently. She did, yeah, but. Is she probably, to drama, Dante?

You know, I guess maybe I have to start questioning that, right? I mean, maybe it didn't really happen. I don't know. Okay. The average earthquake lasts between 10 and 30 seconds, which is a wide range. That is a wide range. Man, 30 seconds sounds pretty awful. Yeah.

10 sounds bad. 30. Okay. Anyway, well, it feels like we're getting one calamity a week here. So let's talk about the jobs numbers. And per tradition, Dante, I think you've looked away here. You want to give us a sense of the numbers? Sure.

So I guess we should stop being surprised at this point by strong jobs numbers. It seems like the last few months we keep being surprised and maybe now we shouldn't be. We got 303,000 jobs added in March that brings the first quarter average to 276,000. Pretty impressive first quarter in terms of job growth. that's coming off the heels of what looked like a decelerating job market towards the end of last year. If you go back to November of 2023, the three-month average was just below 200,000 and looked like it was headed south. And that's turned around here in the first quarter of the year. Broad-based job growth.

No major industry had a decline in jobs in March. Still concentrated in the same three industries that we've seen over the last six months or so, healthcare, leisure and hospitality. and government accounting for about two-thirds of that headline gain. I would say it's much more solidly good news this time. I mean, because we got strong job growth again. We also got some of the other sort of signs of some weakness reversing. So we got average hourly earnings or excuse me, average weekly hours picking back up again and they look like they've normalized over the last few months.

Average hourly earnings still look like they're moderating and sort of coming into a slow landing point here around 4%. The unemployment rate actually ticked back down after it jumped up a little bit last month, which was a little bit concerning. The household survey in general was more upbeat in March after we got some sort of funky readings over the last couple of months. We got strong gains in the labor force, strong gains in household survey employment. Unemployment rate edged a little bit lower, participation rates, employment population ratio, all sort of edging higher and sort of moving back to what we would expect them to look like in a solid, strong job market. So I'd say by and large, it's hard to find a problem. I think, again, if we sort of reset our expectations that job growth at 250,000 or even 300,000 might be okay.

I think it's hard to find a problem with the report this month. I think we might have to just adjust expectations around what sustainable job growth looks like for 2024 a little bit. Yeah. Okay. So I always ask you this, given the numbers and the revisions and everything else, what's underlying monthly job growth? You know, extracting from the vagaries of the data and seasonal adjustment, other measurement issues, what do you think it is? Yeah, I honestly think my answer might be different this time. I think, for the last several months, my answer is, I think, around $200,000.

And I'm not convinced it's that low anymore. I think it might be closer to $250,000 at this point. I think that's average monthly job growth of the past six months and past year. It was just a little bit south of 250K. That's what it feels like, yeah. So, you know, if we, a year ago, or maybe two years ago, if you said 250, maybe a year ago, 250K, it would be almost like hair on fire, right? Because the thinking would be that's well above the growth in labor supply.

and the labor market is going to tighten further. Unemployment flow is going to go lower, and that's going to fan wage pressures, inflation, force the Fed to jack up interest rates more, even more, and, you know, ultimately recession. But here we are today. We're getting $250K consistent and there's no hair on fire because it feels like the supply side of the labor market has kicked into higher gear here, meaning we're getting a lot more labor force growth. Even though we're not, it's hard to measure and we should talk about that.

But we're getting a lot more labor force growth. And the evidence that we're getting enough labor supply to meet the increase in jobs, labor demand, is the unemployment rate is rock, solid, stable, you know, it's going up. Even this number we got today, 3.8 down from 3.9, that was only because instead of being revised up, it was rise down. It was, I think if you go to the second significant digit, it went from 3.86 to 3.83. So, you know, it's not moving.

And that's consistent with, therefore, you know, 250K is the kind of what we're getting on the supply side, a lot of growth on the supply side of the economy. Is that if Dante a fair characterization? Yeah, I think that feels right, right? If you sat here a year ago and told me that was, we were going to average 250K, I would have thought there was a problem

and, you know, it doesn't appear that there's any major problem. An overheating problem. Right. Yeah. And right now, perfectly saying when no drama, oh, no drama, Dante. There you go. There you go.

It doesn't feel like there's any drama. It's like we're formulating a title for this podcast, everyone. So, okay. All right. So maybe I'll turn to Marissa next. There's this, you know, everything I just said isn't actually borne out in some of the data Because, you know, there's this disconnect between what we're seeing in the payroll survey, the $300K last month and the $250K average per month that we've been getting for the past year.

And what's going on in the household survey, it's not like it's saying we're getting all this labor supply. Unemployment rate stable. We're not getting all the labor supply. There's this seeming disconnect between these two surveys. Mercedo, do I have that right? Except for this month. So this month there was a right. Just close the gap a little bit.

Yeah. This month we did get a very big gain in the labor force, almost half a million people. And same with household employment. If you adjust the household survey to match the payroll survey concepts, which means you take out the self-employed, you add in the multiple job holders, you do these other, you know, adjustments to make them comparable. That brings the gain down, but it's still over $300,000 on the household survey. you're right. If you look back over the last several months, the household survey has been much,

much weaker than what the payroll survey has shown. And we thought, well, maybe the payroll survey gets revised, right? Maybe we'll see these big downward revisions to the payroll numbers. And we really haven't even seen much of that, right? Like, if you look at the, I don't know if you said this, Dante, but the revisions over the past two months to January and February, one was up a bit, one was down a bit, but the net, the net result was that both months were combined, revised up again. So something is amiss, I think, here, right? There is this disconnect. And I think you were alluding to the labor supply issue being measured perhaps by a lot more immigration that we're getting that isn't being picked up in some of these government surveys yet.

Yeah, you want to explain that in more detail, you know, exactly. Yeah, so we get obvious. That's the thing that squares the circle here, right? Right. Yeah, but. No? Yes, but it's still not 100% clear to me. Okay.

Where these people are showing up or aren't showing up and why they're not in some instances. So the official population numbers come from the U.S. Census Bureau. The Census Bureau does obviously the decennial census every 10th. 10 years, but then every July, they kind of fill in the gaps. They have updated information on immigration, births, and deaths. They have a model that they use to predict interyear population growth, right? That has typically shown that immigration into the U.S. has averaged about a million people a year over the past several years. The Congressional Budget Office, however,

came out with estimates because they also have to have accurate readings on population growth so that they can update their estimates of potential growth of the economy when they have to predict budget shortfalls or surpluses years and years out, right? And what potential GDP growth is. They think that immigration, based on data that they have, is more like $3 million instead of $1 million over the past several years, that it's been, it's ramped up from 2020 through 2023. So that is significantly different from what the Census Bureau has said. And so if we're getting in excess of 2 million more immigrants into the country than we're

officially counting, that could help to explain why there is so much labor supply out there. And the unemployment rate has been low but steady for the past. several years. So, you know, somehow we're able to pull in 500,000 people into the labor force every month where are these people coming from when the unemployment rate is so low, it could be that we're getting a lot more immigration into the country, and that's accounting for some of the strong payroll survey growth that we're seeing. Yeah. Then I guess the question is, why isn't it showing up in the household survey? Right. That's going up in the payroll survey, but yeah, payroll survey survey of establishment.

business, it's showing up there, but it's not showing up in the household survey. Right. So, yeah. I mean, the answer that most people put forward is in the household survey, Census Bureau is actually calling up households and interviewing people. Somebody who's in the country, who's undocumented may be very hesitant to talk to somebody on the phone. And answer questions about their employment status, right? Even though this survey does not ask any questions about either legal status, either, you know, citizenship status, legal status being in the country or employment status in that way, you know, it's easy to see why people wouldn't want to talk to a Census Bureau official, right, if they weren't in this country in a documented way. On the other hand,

on the payroll survey, they're asking employers, how many people are on your payroll? Leave it at that, right? So you could be capturing those people in the payroll survey and not in the household survey. Right. Right. Chris, and I asked you this question, or maybe I asked Dante. I ask everyone the same question until I get the answer. And I think we got the answer yesterday in our email exchange.

You know, I was perplexed by how an undocumented immigrant could show up on the payroll of a company. I mean, I know there's going to be some, you know, a below board kind of hiring of undocumented workers, but could a lot of American companies be hiring undocumented immigrants and bringing on payroll? They, you know, these presumably, they don't have a social security number. They don't have a lot of, you know, kind of the standard information that, you know, people have when they're employed here. How could that happen? And I think we got an explanation, right, Chris? Yeah, at least.

One that seems plausible. Seems plausible. It says that suggesting that many of the undocumented workers that population we're talking about here over the last few years have entered the country seeking asylum, right? So they get to the border. They seek asylum. And they are released or paroled into the country so that they can await their trial date or whenever the court proceedings are scheduled. And that could certainly given the backlogs. It's years now, right?

So in the meantime, these individuals are allowed to get employment authorization, right? And so they can legally work while they're awaiting that process of the asylum claim. And like I said, it's a very large increase that we've experienced over the last couple of years. So that certainly could explain a lot of what we're seeing here. Yeah, I didn't know that you can get a so-called employment authoritative. authorization document, EAD, you know, you're undocumented. You can get that and you can start working. There's different statuses depending on your circumstance, but you can start working pretty quickly in many cases. And in other cases, it takes a few months, but, you know, this

surge of immigration that we're seeing has been in play now for more than several years. So, you know, it's just trying to show up. So that's, so you, so businesses, The HR department is reporting to the BLS saying, I've got these many people on the payroll. Some of them are going to be undocumented through that's at least what we're observing. And but if the BLS calls up that that undocumented worker and says, are you working, that that person's probably not even going to answer the phone, right? Because they're going to be fearful that, you know, I don't want to talk to you, but they don't need to talk to from the U.S. until I have to actually talk to somebody. That's kind of what feels like what's going on, right?

I also wonder maybe this question for Marissa about the sampling that is done, if you have new entrant, how likely is it that they even are in the- Show up in the sample. Yeah. Yeah. Yeah. Yeah. And yeah, those samples are redrawn yearly.

They're model-based samples that try to capture the population at large, but we're still only talking about a. a sample of 60,000 households across the whole U.S., right? Right. And we also don't know what the living situations of a lot of these people are, where they're living. So, yeah, it may not be accurately sampling this population. So, Chris, do you buy into this kind of what's going,

this explanation for what's going on, that we are, the economy is creating a lot of jobs. You know, it's on track, it created $3 million last year. It's on track to create $3 million this year if it keeps up the current pace. You know, that would, that would never have happened, if not for this significant increase in immigration from a million per annum, which is what we were getting before, you know, the pandemic, typically, to something CBO now estimates, I think last year they estimated in 2023, 3.3 million. And that's not slowing down, right? I mean, you can see what's happening at the border. And also legal immigration is also up, right?

Yeah. It's not just illegal. It's not just illegal. Yeah. The number of visas that are being, because the labor market's tight and businesses need help. And so we are able, the economy is able to support reasonably well, the strong growth in jobs and employment without experience. experiencing wage and price pressures.

I mean, is that, you buy into that? I do. You do. I mean, we've certainly pulled in some people off of the sidelines as well, given the strength of labor market. So some additional supply from people who may have been more discouraged, but that doesn't, it's not sufficient. I think the immigration piece of this, to me, is what squares the circle.

Right. Okay. Okay. Anything else on that that we should. I mean, I guess the other point is there's no, maybe I said a minute ago, there's no reason to expect this is going to change anytime soon, right? I mean, given what's going on at the border, it feels like we're going to continue to get a large number of immigrants in the country. And it goes without saying it all the surge in immigration creates a lot of challenges for communities across the country. You can see it in the border stage.

You can see it in big cities across the country. They're trying to figure out how to house all these immigrants. in a time when we have a very severe shortage of housing, affordable housing. You know, there's other issues with just a whole slew of issues that we need to be dealing with. But the upside here, and I say that with a question mark, it feels like an upside. The upside here is we can grow more quickly. We can create more jobs without wage and price pressures. And it kind of is all happening at a very opportune time, right?

Because, again, if you go back a year ago, two years ago, we were hair on fire. You know, labor market's excruciatingly tight. I can't find workers. Wage growth was accelerating. Price pressures were developing. The Fed was jacking up interest rates. It just felt like we were going down, you know, a dark hole into recession. And this all came together, the immigration, this labor supply kind of came together.

you couldn't ask for a better timing, right? I mean, in a sense, in a sense, abstracting from the challenges from a pure labor market perspective in terms of trying to avoid an economic downturn, this feels like this was critical to being able to navigate 20, 23 without a recession. But to your comment, Mark, about this not ending, I mean, I think if we get a President Trump next year, this could put a big damper on immigration. Yeah, good point. I was really focused on 2024, but you don't have to look too far into the future. Right.

Yeah. I do think, though, there's, I saw an interesting, I think Chris actually sent the Brookings research, which looked at the shape of labor force participation from immigrants and how it changes over time once they're in the U.S. And I think that it lends some support that we've got some runway here where labor supply likely has a boost because what typically happens is that labor force participation is only about 50% in the first year when someone immigrates. And then it rises over the next several years and lands, you know, in the 70 to 75% range, you know, after several years. You know, so they estimate that the cohort that immigrated in 2022, right, labor force participation is only about 50% for that group, but it's likely to continue to rise. And the same will be true for people that immigrated in 2023.

So I think there's still sort of lots of new entrants that are likely to come into the labor force from people who are already here. So even if you saw immigration get cut back, you know, in 24 or like, you know, 2025, I think you still have this sort of influx of workers into the labor force that are likely to come, you know, from previous cohorts of immigrants. That's a great point. Although I suppose if former President Trump does win re-election and does follow through, on what he's proposing, and that is not only shut down the border, but deport a lot of undocumented immigrants, that may not help. That would change the story a bit. Yeah, it would change the story.

You're just stopping the flow versus reversing. Exactly. Right. Exactly. Okay. Chris, I didn't give you a chance to kind of talk more broadly about the jobs numbers. What do you think? Again, solid report.

solid reportings to show that we are able to create jobs that there is an ample supply of whatever the source of workers shows up so it's quite strong. There were, you know, again, as usually you can always find something in the report to debate. I did notice

that much actually all the job creation if you take the numbers of face value was in part-time right, the full-time work actually fell. Number full-time workers fell. Do you buy that at all? I don't know. I don't know.

It's a household survey number, right? I mean, come on. Does that make any sense? Maybe not the degree, right? The direction, perhaps. Also, a number of multiple job holders, right? So that's also something to consider here. Big jump.

Can I ask a technical question? Maybe to Dante or in Mercer, if I look in the payroll survey and look at average weekly hours, you know, that, that kind of bounced, that's kind of bounced back in the last couple of months. And I think it's sitting exactly where it was a year ago. If we had, if all the job growth in the past year was part-time, would that be the case? Wouldn't it, wouldn't it also, I mean, not necessarily the case, but wouldn't it be more likely that we'd see some weakening in the hours worked in the payroll survey as well? Or is that too disconnected? Dante?

I think that's fair. I think if you're really seeing, almost all job growth in part-time employment, I think you'd see some downward pressure, which, you know, could have contributed to the fall in hours that we saw over the last 12, 18 months. But that, you know, looks like it's stabilized. And like you said, it's a little change over the last year at this point. So I'm not sure that that holds a whole lot of water to think that, you know, sort of all job creation is part-time at this point, just doesn't seem to fit. I guess it fits in the sense that a lot of the job growth is in industries that tend to have more part-time workers, right? I think.

healthcare, leisure hospitality, meaning restaurants. Government? No, I don't, that's not part-time. I don't know. I'm stretching. But that's the best you could do, Chris? That's the, the blemish you could, any other blemishes that you can think of? No, not really.

That's, you know, that's, I guess you could point to the, not a blemish, but just an observation that the over-65 cohort remains. Yeah. out. Their labor force participation rate is still depressed relative well to 2019. Am I right when I say the participation rate is at pre-pandemic levels or higher for every age group except for 65 plus? Is that roughly right? That's roughly right. Actually, I looked at this this morning. 35-44 is actually above. Above. That group is, and maybe that goes to that immigration.

for, I don't know. Right. Why do you think the 65 plus participation rate is so depressed compared to certainly pre-pandemic? Because pre-pandemic, it had been steadily rising, right? Yeah. The pandemic hits and it fell and it shows, it's flat as a pancake. It has shown no improvement at all since falling in the teeth of the pandemic. I think you have that booming stock market.

Is that what it is? Yeah. housing prices and the need. It has risen for women, 65 and over, since it's out, yeah, but not men. Not men. Yeah. Okay. Yeah, you just think it's the wealth, kind of a wealth effect.

A wealth effect. Yeah. Yeah. Maybe on this gender dimension, maybe the composition of the end is shifting. Right. Okay. Well, Mercer, anything else you wanted to add in terms of broad, strokes?

It is pouring rain here. So I don't know if you can hear that, but it's hard to hear you. It's actually pouring so hard. So I was going to put on my headphones. We got weird events. Can you hear me? Earthquakes, floods. I know.

I'm looking at the window. And we have a solar eclipse on Monday. Solar eclipse Monday. Oh, that's that muskists are coming. The frogs. Yeah. The frogs. Yeah.

Yeah. Well, just that leisure hospitality now for the first month since the pandemic is back to where it was prior to the pandemic. Remember, this was like the big industry that hadn't recouped all the jobs. So with this month's job game, it's back. So now there's only one major industry that's not back. And that's other services, this other personal services group, which is about six million people. It's smallish, but significant. And that's still about 40,000 jobs below its pre-pandemic level.

That's the only one. Every other industry is back. Government? Government is back. And all three levels of government are back. The only other one you could point to is mining, but I don't count that because that's up and down with oil prices and drilling and that kind of thing. But yeah, everything else is back.

There was a big gain in construction. Yeah. Also last month, right? So we've been, I mean, what we've been seeing is very strong service sector growth and the goods producing sector manufacturing and has been sort of languishing. But there was a big uptick in construction mostly among contractors, residential contractors. So people are remodeling those houses because they can't buy new ones. Yeah. And you speak from experience.

I do. That's why you're smiling. I love remodeling houses. That's what I do. No. Well, I, you know, if I think I've used this before, I'll just use it again. This is picture perfect. I mean, like there's nothing wrong. I mean, the job market is, we need to put a pin in this data, the March of 2024, because I don't, how can it get any better, really, when you think about it. Amazing. Oh, go ahead.

The other good thing is that average hourly earnings, I mean, while they accelerate it over the month, they're up 4.1% over the year, which is the lowest we've seen since the pandemic. It's still about a percentage point above the pre-pandemic year-over-year growth rate. But I mean, that's steadily come down too. So there's not much evidence that all this job growth is pushing wages higher, right? That's a feature. Four percent. Not a bug. Right. Yeah. So January was a fluke. That's what it looks like. Yeah. Yeah, I mean, 4% is exact. I think that's where it should be. I mean, that's consistent with the Fed's inflation target of two plus current

productivity growth, right? You know, it's at least two. Is that right, Don't say? Is that right? Current productivity growth, yeah, I might buy that as it too. Yeah. Is that where we're going to land two years from now? Here's the other thing.

I mean, you know, businesses' profit margins have not come in at all. They surge during the pandemic. They've not come in. So it's not like they have a lot of pressure from labor costs to jack up price. You know, even at this point, it's the opposite as competition kicks in and people start, you know, shopping more carefully for things. So everything looked strong job growth. Dante pointed out reasonably broad-based job growth. I mean, you mentioned construction.

that never happens when interest rates are high. It just doesn't happen. I mean, and there's a lot of reasons for that that, but nonetheless, hours worked. You know, I was worried about that a couple months ago, not so much anymore. I was worried about hiring, but that feels like that's okay, you know, looking at the job opening labor turnover survey data. You know, quits have normalized. Unfilled positions are still elevated compared to pre-pendemic, but I don't think that means anything. It's just the way business are, you know, using labor unfilled positions. There's been a change in that.

There's no cost to maintaining unfilled positions or very low cost. Average hourly earnings. I mean, unemployment. I mean, that unemployment number, three, eight, and it's like over two years now. It's been, you know, below 4% or below. It's just, am I wrong? I mean, it's just unbelievable. The labor market is just.

picture perfect about as good as, I mean, it is as good as it gets, I think. No? You wouldn't disagree with that? No, I agree. I think it's been more about resetting expectations for what job growth should be, right? I think for a while last year, we kept expecting this steady deceleration and job growth. And now with this sort of new insight on immigration, I don't, I don't think that should be the expectation. And so if you go into it, assuming that, you know, we should be adding to 250, 275,000 jobs a month. And that's what we've been getting. and everything else looks good like you mentioned, then yeah, I think it's hard to find fault. Yeah. Okay. All right. One more thing. Just back to the immigration story. If you look at the

breakdown in the household survey of foreign born versus native born over the past year, the foreign born civilian non-institutional population is up almost three million, whereas it fell for native of born and all pretty much all the labor force over growth in the past year has been among the foreign born. I think actually I was looking at that data. I think all of the labor force growth since the pandemic hit is foreign born, all of it. I think I think native born is, you know, no change whatsoever. Yeah.

Yeah. So do you think the Fed is now just ignoring the labor market data and they're just solely focused on inflation? Well, I was going to come back to the Fed in the market. So why don't we play the game just to break things up a little bit and then come back and talk about it in the context of monetary policy. You don't mind. Is that okay? I don't mind.

Okay. I know because you want to get right to that game to show off like you typically do. See how she does that? Yeah. All right. So let's play the game, the stats game. We each pick a statistic. The rest of the group tries to figure that out through cues and deductory reasoning clues.

And then the best one is one that's not so easy. We get it immediately, one that's not so hard. We never get it. And if it's apropos to the topic at hand, all the better. So, Marissa, you're up. What's your stat? My stat is 17.7%. Labor market related?

Yeah. In the jobs report? Yes. Payroll survey? No. Household survey? That's the one. Okay.

See, guys, I got you so far. Now, I got you really far. into this. Now, take it is that an unemployment rate of some kind? No. Is it a share? It is a share. Okay. Is it the share of the labor force?

No. No. Share of the unemployed? No. Oh, goodness. Share of the population. No. What's left?

What is left? Share of employment part-time. share of employment. Yes. Oh. Ding, ding, ding. This is that, yeah, this is the share of workers that are part-time, according to the household survey, 17.7%.

This is the highest that it's been since early 2018, since March of 2018. So you obviously had this spike during the pandemic, right, when like all the jobs that people could find in early 2020 were part-time. And then it fell very. quickly when the economy reopened and it's been steadily rising. But if you look at a longer time horizon, Chris brought up this statistic, right? So if you look at a longer time horizon, this isn't alarming. I mean, this has kind of been falling structurally over time, the share of people working part-time. But this is nevertheless the highest it's been since early 2018. I looked at because there's two types

a part-time employment, right? There's people that are working part-time because they want to be part-time. They choose to work a part-time job. And then there's people that that's all that they can find or their employers cutting back their hours. People that are working part-time for economic reasons, this is like the bad part-time. This is the part-time, the involuntary part-time. That's only 15% of part-time work. And that is near an all-time low. So it suggests that, that though we have more people working part-time, the vast majority of them are doing it because they want to be working part-time jobs, not because that's all they can find or because, you know, their employer is cutting back their hours.

Oh, that's fascinating. That's fascinating. Don't we, Dante, in the payroll survey, have data showing the number of dual job holders? Isn't that data in there? In the household survey, there's multiple job holders. It's not in the payroll survey. Oh, no, it couldn't be the payroll survey. It would be in the household survey. And, in Mercy, did anyone look at that? Yeah, that's, that's low.

It's low. Yeah. But it rose this month. This month, yeah. But it's like 5.2%. Is it 5% or 6%. Is it 5% of? 5.2.

Okay. Is that, put some context to that? That's a little bit to hire, but it's not unusual. So people who are taking part-time jobs are taking part-time. It's not like they're taking a second job. They want a part-time job. It sounds like they want a part-time job. No?

The vast majority, it sounds like that's the case. That's the case. But I mean, that doesn't necessarily, if they're taking a second job that's part-time, that could still be a choice they're making, right? I mean. Yeah, oh, yeah, yeah, yeah. I'm just saying that it feels like most part-time jobs are not dual job hold. These are people who want a part-time job.

Just one part-time job. Right. I mean, just given the low share of people that have more than one job, it suggests that most of the people that are working part-time, it's their sole job. Right. Could this be remote work dynamics playing a role here? It makes it easier to do part-time remotely, I would think, right? That's the glass half-full version, right?

Okay. It's just more flexible. That's me, Chris. Glass-half full. I know. I know. Okay. It could be the older worker as well who, you know, previously you were, would have been difficult to contribute a few hours. You wanted to work, but, you know, the labor market was rigid. Now you have some flexibility to contribute. Right.

You know, that's the positive. It's been. Labor market is just more dynamic now. You can accommodate. Yeah. Different. A lot of different lifestyles, a lot of different people with different needs. Yeah. Oh, that's interesting. So what's the glass half empty? Well, that you would have to, that's your. force that you know, this is all you could get, right? And you have to work multiple jobs to make ends meet. That was sort of the basis for my question around dual job holders, because that would be, feels like that. I have to work two jobs to make ends meet, make the, make my rent payment, that kind of thing. The other thing is, as we pointed out, participation rates for older workers is down. So that wouldn't be consistent with, you know, older workers needing to, I mean, it could be,

but it's not needing, but, you know, want to. Right? Because does anybody want more than one job? Yeah, right. I don't know. We're searching our minds if we know anyone. I have a question. Back to Chris's original point about, you know, what if the world, you know, what if the data is right and that all the jobs we added were part-time jobs this month?

Is that necessarily a bad thing given everything else that we just talked about? the fact that, you know, there's very little people, there's very few people working part-time because they're being forced to, you know, the number of multiple job holders is pretty low. The unemployment rate is very low and we're trying to pull people off the sidelines. So if what it takes to pull them off the sidelines is part-time jobs, right, maybe that's all they want. They don't really want to be working full-time. So in the current environment with everything else we know, do we, do we even care if most of the jobs are part-time? Is that necessarily a bad thing? Or is that okay? We're meeting the supply that's out there. Yeah. Yeah. It's just flexibility to present it,

the flexibility of the labor market. Yeah. Yeah. Okay. Okay. Okay. Yeah, that was a really good one. 17.7% of job, what, of employment?

Of employed people are working part-time. And that's high by historical service. On the household survey. It's the highest since early 2018. Yeah. Oh, okay, early 2018. Yeah. Okay.

All right. Okay. Okay. Dante, you're up. What's your stat? Hard to follow that one up. That was good. That's a good one.

Yeah. I'm going to go. 50.3. Is that the one month diffusion index? It's not. Three months diffusion index. Is it a share of the labor force? You guys really have a pigeonhole.

It's not even labor market related. Oh. Oh. Oh, is it that? You just honed right in on me. I mean, that's, far for the course. Is it the ISM manufacturing index? It is.

Hey, I think I said that first. I said it louder, though. She said it louder and got the whole thing. out first, I think. So I don't know how that gets counted. That's a good one, though. Why did you pick that? That's a really good one, though. So it's the first time it's above 50. And I think it had been below 50 for 16 straight months before it rose above the neutral threshold of 50 in March, you know, signaling expansion in the manufacturing sector. To me, it's just another sign that things are going pretty good. Right. I mean, we talked about construction employment still sort of chugging along despite

high interest rates now. It looks like manufacturing is turning a corner. And I think there's some evidence that, you know, we've been talking about for months now that it seemed like there's this gap between, you know, sort of the actual sentiment around manufacturing and the, the hard data that we have. And it looked like, you know, the hard data around manufacturing was a little more upbeat than the sentiment measures like ISM. And so I think this is just starting to bring that together a little bit that manufacturing really is starting to improve. I think we've seen evidence of lots of investment around manufacturing now over the last, you know, six to 12 months. And, you know, it looks like the outlook is more positive over the next 12 months.

than it was, you know, looking back 12 months. Yeah, I think it's a global phenomenon, too. Aren't we seeing signs of life in manufacturing in different parts of the world? China's kind of kicking back into gear. Yeah. Yeah. I think we had a podcast last week with,

wasn't Korea doing well? That was Steve Cochran's. Yeah, right? Yeah, right. Okay. I don't know about Europe. Not about, yeah. Sherman.

Okay, well, so that's also encouraging. So that actually interestingly, like construction, which is very rate sensitive, manufacturing typically when rates rise gets nailed, and that did not happen in this go around. I mean, it kind of slumped based on the ISM survey. Based on industrial production, which is actual output, that didn't, that was just effectively flat. That wasn't even down.

Right. And the same with payroll. I mean, payrolls have basically moved sideways for the last year. I mean, there's been some noise, but they haven't really. declined any meaningful degree. Right. So manufacturing has actually held up really surprisingly well in the context of the higher rate environment. Yeah. Okay. Well, that was a good one. Chris, what's your stat? 909. This was the other one I was going to use. Oh, no, really? Layoff announcements, a challenger. You got it. Oh, right. I decided to go optimistic instead of pessimistic.

Oh, yeah. But there's a there's an, there's a, there's an, there's an optimist. optimistic story in there. Yeah, I agree. Okay, so explain to everyone what the stat is. It's the job cuts announced layoffs from Challenger Gray and Christmas. Right. 90,309 job cuts announced in the month of March. It's the most since January of 2023.

So it's at a high level. It's a big jump this month, almost 7% higher than last month. So pessimistic, right? Very negative, right? Lots of layoffs being announced. But if you dig into the data, what you find is that 36,000 of those layoffs were announcements from the government. There are 10,000 jobs being eliminated at the VA, Veterans Administration, and 24,000 at the Army. And that's unusual.

Last time that happened was back in September 2011, right? So it's a one-time type of effect. In fact, if you remove those, right, then the job cuts are actually down, substantially about 30% down. So, more optimistic stories. Yeah. Why is your army laying off? Do you know? I don't know.

I was trying to figure that out, but I ran out of time. It's probably used to them, too. They're going, it's probably a BLS seasonal adjustment factor or something. Well, this is Challenger. Yeah. Oh, this is Challenger, right? This is announced. Sorry.

You're right. This is announced. Yeah. So the Army actually announced we're cutting 24,000 positions. That is very interesting. Hey, I mentioned the warn notices. Marissa, did you have a chance to take a look at those? Yeah, there's a there is a site that aggregates them all because they're all done by state at the state level, right?

So a warn notice is that if a large employer with over a certain number of employees, I'm not quite, I don't know what that is. Dante, maybe you do? It's actually, I think, different by state. I think it's usually at least 50 employees. Sometimes it's higher depending on the state. So if they're planning a layoff, they have to report to the state's department of labor, the layoff that they're planning, the number of people that will be affected by the layoff. And I think, Mark, you asked about it because somebody told you to look at this as a leading indicator of layoffs.

Chief economist from a very big company to ask. Okay. Well, they're actually down since last year. They don't look, they're not high relative to pre-pandemic. They're actually kind of low relative to pre-pandemic. And they've been falling since the middle of 2020. There was a spike in mid-2020, mostly coming from large tech companies. If you remember, you know, a year or so ago, right? We had all these big tech announcements. And so you do see that in the Warren notice layoff, but in the Warren notices, but since then they've been kind of falling. So they're nothing to do in there. They're sanguine picture there as well. Yeah. Yeah.

Okay. All right. I mean, wow, amazing. All right, I give you my stat, 80.7 percent. That sounds like a participation rate or something. This is not participation. That's a population, yeah. It's going to be prime age, though.

It's not overall. Yeah, prime age, prime age of employment to population. Another really good measure of labor market slack is perfect. I mean, let me just say it again. It's perfect. It's perfect. Exactly consistent with a full employment economy, not too hot, not too cold, exactly where you want it.

And it's kind of been traveling around that level now for a while, you know, well over a year, probably a couple of years. It just shows how, it's almost like, you know, it's almost like someone's sitting there drawing on a piece of paper what numbers they want and we're getting them. I mean, it's just like unbelievable.

Now, someone's going to take that and say there's a conspiracy here. I was going to give a warning. That's not what happens, by the way. That's not what happens. That's, although apparently a lot of Americans think that probably is what's happening,

given their feelings about the economy. But my gosh. I mean, just unbelievable. It's just unbelievable. The numbers are, again, put a pin in this month, March 2024. It may be the high watermark for, you know, decades to come. It's just unbelievably good, unbelievably good. Okay.

Let's end the conversation around, you know, what all this, the data mean for the Fed and markets. Maybe, Chris, I'll turn to you first. I don't know if you've had a chance, but I saw the stock market lots of green. I saw the bond market, long-term interest rates were up a little bit. What about the expectations around the Fed and the first rate cut? Any sense of that? Yes. Fell a little bit in terms of, I'm sorry, in terms of June.

Looking at June as the first rate cut, May is off the table. Nobody expects May or very few. For June, there was a little bit of a decline, but still a majority, believe that the first cut will be in June at this point. And still as I looked out until December as well, and same thing for a small majority suggest three cuts this year. Okay, so market participants are viewing this data just exactly the way we are. Yeah, really strong, lots of job growth, but nothing to worry about.

because we got all this labor supply and wage and price pressures continue to move in the right direction here. Yeah, I suspected it was that average hourly earnings number, the 4.1%. Oh, is that what it was? Marissa that mentioned, if you're not seeing that wage pressure there, that's, you know. Yeah, I think technically that that could have come on on the hot side, right, because of calendar effects. I think there was some expectation it might come in even stronger than the 0.3 for the month.

Okay. Yeah. Yeah. So, Mursu, you asked the question. it was a really good question. I'm paraphrasing. Tell me if I got this wrong. You asked, does the Fed even care about these job numbers anymore?

It's all about the inflation numbers. Chris, how do you answer that question? I think you're right. I don't think we're particularly concerned about the labor market at this point. It's all about next week. CPI can report and then the other inflation reports before the next meetings. Right. Yeah, I don't get the sense that the job numbers matter at this point.

I mean, unless they really move in one direction, big, one direction in a big way, you know, up or down. But at this point, it's all about getting the inflation numbers that are consistent with the idea that we're at Target are pretty close to Target or headed in the, headed back to target. And that January, I think everybody knows who listens to the podcast, the January, the January, inflation numbers were hot. They came in strong.

And February wasn't quite as strong, but they were still on the highest side of, I think, what the Fed would feel comfortable with. The argument, I think, and it's a good argument, is that that's measurement issue, technical factor, seasonal adjustment, that kind of stuff. If that's true, then we should see much better inflation statistics for the month of March, April, in May. And we're going to start getting the March number next week, I think, for CPI, so we'll get a better sense of it. And that's what I think the Fed policy makers, everyone's

focused on, because that's the, that's the bar. We need to see, you know, point two, point, no higher than point three on core, preferably closer to point two. Maybe it would be nice to get a point one, you know, a month to month increase. And if we do, we'll get, we'll get a June rate cut, you know, something like that. If we don't, if we keep getting point three's, then I don't think they're going to cut. Agree? Yeah. Absolutely.

Yeah. Okay. And as I said, the equity market, stock market, seemed to like it. I mean, of course, it came off. It's coming off a few days of lots of red. So maybe it's just a kind of a reaction. Reaction.

Bounce back reaction. But, okay. Anything else on the Fed or markets, Chris, that you want to bring up? or Dante, Marissa, anything else? I think Powell basically came out and said as much as week, right? The job growth itself doesn't, you know, strong job growth isn't enough to stop them from cutting rates.

I mean, I think wage growth maybe still matters a little bit, but I don't, I don't see there's enough what happened between now and June on wage growth. Year over year and three-month annualized wage growth were at 4.1%. I don't see that changing enough over the next two months for that to matter to move the needle in terms of what they do. Yeah. Do you notice in that same speech, part one was about the economy, to your point. The second was around Fed independence. Did you catch that? I don't think many people bought it. I didn't. Oh, yeah, you should go read it. I mean, he was talking about how important Fed independence is to the well-functioning of the economy and how the Fed strives to, you know,

ensure that it is independent, you know, by being so transparent about the, you know, what it's looking at, how it's looking at things, how it's setting policy. But very clearly, top of mind for Fed officials, this presidential election and getting politicized, they really don't want to do that. So really don't want to get caught up the politics. I wonder if that means they're looking at a later in the year, rate move. Well, if they're not option, right? Sorry. No, no, I was just going to say if they're true to their word, then that should have no influence, no impact, right? Right. But is he kind of setting the stage by saying anything we do is totally independent,

even if our next rate cut isn't June, it's in the fall, right, before the election. You should ignore that. Yeah. Well, fortunately, I think there's a meeting. There's June, kind of July-ish, September, then November, after the election. It's like the day after, yeah, the election. day after the election. So it gives them a little, maybe they did that on purpose.

I'm pretty sure they did set the meeting after the election as opposed to before it. But anyway, hey, I want to end with attorney you, Dante, you know, why are your forecast so wrong on the job numbers? I will say, I did bump my- I bumped it up just the other day. I got like I was in line with consensus for the last four or five. It just felt like I got to break the number. old a little. I know I'm busting, I think the phrase is busting your chops. But it's a broader point. Everyone has been pretty wrong. And everyone's been coming in low relative to the reality of what's

going on. Is that just because it's only now it's sinking in what's going on with immigration and the labor force and that the sustainable level of job growth is a lot higher than we thought? Yeah. I mean, I think over the last couple of weeks, we've gotten some new research around you. It's putting a finer point on the impact of immigration. And, you know, because I think up until recently, it seemed likely that that trend job growth was closer to 200,000 than 300,000, right? It seemed like we were headed back towards where we were late last year, not sustaining, you know, 250, 275.

And now it feels like that is more realistic that we could sustain higher levels of job growth. I think, I'm guessing that tide's going to start to shift here over the next couple months in terms of what the consensus view is. Yeah, the interesting thing is, you know, we have in our minds these models, and we think we know where the trends are going, and therefore that influences, you know, our estimate. Like you do this other really, really cool thing. You take a look at the job opening labor turnover survey data,

and because that kind of extends further into the month. The BLS survey for the employment report is kind of mid-month. The joltz data that comes out a little bit later takes information that goes through the entire month. So it gives you a bit of a forecast, some insight into what's going to happen in the next month. and you use that, and I noticed that when you did it for the month of March, you were coming in at 260 or something, something close to that. But you, you know, I mean, it's not full proof, but but nonetheless, it feels like we all are, this is, this is a bias we all have. We've got kind of this prior sense of where the anchor is. And, you know, if we're going to err on the one side

or the other, we err towards the anchor, even if we're getting other information that suggests otherwise. Yeah. Yeah, when I was thinking about the forecast, it's like there really wasn't anything out there that would suggest that job growth is going to slow in any meaningful thing, right? Exactly. And that's why I finally'm like, I don't see why. Why is it 200?

Yeah, why is it 200? I don't know that it's going to slow at all. And it certainly doesn't seem like there's any evidence that is going to slow that much. I mean, UI claims have been steady, the implied job growth from joltz to the end of February. like you mentioned was rock solid compared to January. It was just, it was hard to find anything that would suggest is going to slow at all, let alone slow from, you know, 275 down to 200. Yeah.

Yeah. It's, uh, we have to have the courage of your, what, your data, your models, your, yeah, it means I have to go back to start asking you what your forecast is beforehand so that, you know, we can have an actual comparison. I, no, I, this bias. What's the, there's got to be a description for this bias? Anchoring bias. Anchoring bias.

That's exactly, that's right, anchoring bias. This anchoring bias, I'm more guilty of that than most people, I think. That's my biggest bias. I got many biases, but this is my worst bias, the anchoring bias. I mean, I've got a model in my mind and you have to, there has to be a fair amount of data saying that model is wrong before I move. I guess the other, isn't that I'm more like a hedgehog? Isn't that like the hedgehog and the Fox?

You know, that kind of in terms of forecasting browse. Yeah. Dante is definitely, I don't know what he is. I can't figure out. All this means is that for the fork, I'm going to go, you know, 275 next month and it's going to come in at $1.25. That's what's going to happen. I'll get that courage of my conviction and then it's going to just go right the other way.

So look for that. Yeah. Actually, that would be a really cool thing to do. list all the biases that are out there. And then we take a cert, we have surveys and we each ask ourselves, you know, rank order these biases in terms of which you're most guilty of

and which are least guilty of. I'm sure someone's done something like this. But it would be very interesting. Yeah. Now you don't think so. You're looking at me like, I don't know if you'd get an honest answer. I'd be honest.

I tell you, my anchoring bias is my worst. Well, and this is all, you know, for my own head, you know, I could be dead wrong. It could be a bias. I could be biased. Exactly. All right, we're going to call this a podcast. That's an interesting ending, I think, at least in my mind. It's an interesting ending.

Any other last words? Marissa? Everybody should try to, are you guys going to watch the eclipse on Monday? Are you in the path of? We are. Eerie. Totality. We're slightly off the path. We're like 90% or something.

I'm too afraid to lose my eyesight. I'm not doing it. You have to order the glasses. I'm not doing that either. I don't trust them. I don't trust them. I'm just saying. That's a bias.

Another bias. I'm just going to say your eyesight. Well, I can't smell anything. So I've got to preserve my eyesight. You're down to. I'm down a sense already. I can't afford another sense. You imagine cheap economists who can't see or smell?

Oh, geez. Maybe that's a benefit, right? Is that clouded by the data? You stick with your mouth. It's going on your gut. Yeah, that's right. That's right. Yeah, definitely.

All right. We're going to call us a podcast, dear listener. Take care now. Talk to you next week.