While the US jobs market continues to appear relatively robust, a deeper look at December's data reveals several signs that point to material weakness emerging.
Hello Steven. Do you see : disinflation + soft landing + aggressive rate cuts + spx 5k coming this year (or) any chances the inflation might start to spur back & fed dialing back the rate cut talk due to the easing fci and putting downward pressure on the markets? What us your macro view (esp inflation wise) for the rest of year?
Given that the M2 money supply continues to fall, I expect that disinflation will continue.
Whether or not aggressive rate cuts are delivered is likely to depend on whether the US economy enters a recession.
If the US enters a recession, then I would expect aggressive rate cuts. In the absence of a recession, I would expect rate cuts on account of disinflation, but for them to be less aggressive.
In terms of my more specific inflation outlook, I am currently completing an update to my medium-term US CPI forecasts, which I hope to release this week. I also intend to release a quarterly economic update in the near future, which will flesh out my broader macro view - stay tuned!
I'm curious. Why does NFP get revised? Do they get additional survey responses or change the seasonal adjustment? My judgement on the NFP is that it is detailed granula data from a poorly responded to survey, then poorly seasonally adjusted (particularly bad post COVID) resulting in nonsense results that don't correlate well with real data. Am I being too negative?
Nonfarm payrolls get revised as a result of both additional survey responses, and changes to seasonal adjustments.
Furthermore, nonfarm payrolls are also subject to an annual benchmark to more comprehensive QCEW employment data.
I wouldn't say that it generally gives nonsensical results. It's just important to recognise that employment data is subject to revision and significant variability, making it important to delve deeply into the data, including looking at each of the establishment survey, household survey, and JOLTS reports, which can help to either corroborate, or raise questions around certain data points. It's also useful to look at shifts in non-seasonally adjusted annual growth rates to help mitigate any potential concerns around seasonal adjustments.
Hello Steven. Do you see : disinflation + soft landing + aggressive rate cuts + spx 5k coming this year (or) any chances the inflation might start to spur back & fed dialing back the rate cut talk due to the easing fci and putting downward pressure on the markets? What us your macro view (esp inflation wise) for the rest of year?
Given that the M2 money supply continues to fall, I expect that disinflation will continue.
Whether or not aggressive rate cuts are delivered is likely to depend on whether the US economy enters a recession.
If the US enters a recession, then I would expect aggressive rate cuts. In the absence of a recession, I would expect rate cuts on account of disinflation, but for them to be less aggressive.
In terms of my more specific inflation outlook, I am currently completing an update to my medium-term US CPI forecasts, which I hope to release this week. I also intend to release a quarterly economic update in the near future, which will flesh out my broader macro view - stay tuned!
I'm curious. Why does NFP get revised? Do they get additional survey responses or change the seasonal adjustment? My judgement on the NFP is that it is detailed granula data from a poorly responded to survey, then poorly seasonally adjusted (particularly bad post COVID) resulting in nonsense results that don't correlate well with real data. Am I being too negative?
Nonfarm payrolls get revised as a result of both additional survey responses, and changes to seasonal adjustments.
Furthermore, nonfarm payrolls are also subject to an annual benchmark to more comprehensive QCEW employment data.
I wouldn't say that it generally gives nonsensical results. It's just important to recognise that employment data is subject to revision and significant variability, making it important to delve deeply into the data, including looking at each of the establishment survey, household survey, and JOLTS reports, which can help to either corroborate, or raise questions around certain data points. It's also useful to look at shifts in non-seasonally adjusted annual growth rates to help mitigate any potential concerns around seasonal adjustments.
Great analysis. Would it be possible for you to update this analysis with the data from the latest jobs report out today? Thank you.