The uos and uos of the job market
Here’s a reaction to next month’s Jobs Report – 12 days before it’s released.
As we all know, the Bureau of Labor Statistics releases its monthly Jobs Report on the first Friday of the following month, with some exceptions, such as the first Friday being the first, or a holiday weekend – July 4th, for example – distorting the calendar. This coming month, it will be on the 5th at 8:30 AM.
In the two-day runup to the report, “experts” start letting loose with their predictions, and then once the report is released, there’s a flurry of coverage. Usually – and certainly in the past 27 months of post-recession recovery, the most spectacular ever seen – the analyses of the report have been containing phrases like “much better than expected” and “far more job growth than projected” and “continued record-breaking streak.” Had they really known what they were saying, they wouldn’t have said that. Nonetheless, they are poised at their keyboards, ready to write and ready to quote economists, labor experts, academics, and anyone else they can coral in.
Nostradamus I’m not, but…
Well, today, I’m going to take a different approach. I’m going to give you my take 12 days before the April report comes out – but please note that this is not a projection or prediction. Economists make projections and fools make predictions – and I am neither. Nostradamus I’m not. But there are some laws of nature within the job market – a set of terms and conditions, if you will – that help explain what’s going on, not in an analytical sense but in an interpretive way. Just to keep things in perspective, soon you won’t need me or any other human to analyze the job market. AI is already doing that. But you will – and you always will – need to interpret what’s transpiring, and that’s where AI can’t yet help.
Understand the laws of nature of the job market
Truth is, these last two years – the top two in job creation history – have been, in a sense, unexplainable from a point of view of pure data – and that’s why the flurry of reactions following the release of the report resembles the chatter you hear during the intermission at a concert. Most people continue to voice surprise month after month, in astonishment of the market’s performance, but I, for one, was not in the least surprised. Why? Looking at all the components of the market – open jobs, hires, layoffs, voluntary quits, turnover – then population and demographic trends – none of this should surprise. In simple terms, we’re in the best job market in history.
But all good things come to an end, say some, as they wait for the shoe to drop. Well, yes – and then not necessarily. I’m expecting the report on May 5 to show some fall-off, but I liken it to Joe DiMaggio’s 56-game hitting streak in 1941 coming to an end with an 0-4 game. What did Joltin’ Joe do to follow that up? He began another 17-hitting streak. Was anyone surprised? No. Why? Because that’s the kind of hitter he was. And that’s the kind of market we’re in.
Recession coming? Not so fast.
Then there’s the issue of a recession somewhere up ahead. Careful now: one month of slightly lower job creation (if that’s what we get in the first place) doesn’t make for a recession, but there are some who will declare so, especially as elections near.
The next recession we see will be the 52nd in our history; recessions are as natural, predictable, necessary, and unalarming as the expansions and contractions of your hearts and lungs, The issue is not whether it’s coming, but when. And then the question becomes, how do we handle it? As a result, most recessions are mild, short, and tame. As will the one after that, and so on.
So ,before the cacophony of voices starts weighing in on next month’s Jobs Report, keep in mind what’s been going on for the last 27 months and what the big picture is, “what this is all a part of,” as Albert Einstein used to ponder.
