Today’s jobs data was dynamite. Not only did the US add a forecast-smashing 517,000 jobs in January, December’s figure was revised up, the unemployment rate fell to 3.4 per cent — the lowest since 1969 — and earnings are growing at a 4.4 per cent annual pace.
Revisions are probably coming. As Oxford Economics’ Ryan Sweet notes:
The surge in job growth in January overstates the strength in the job market as employment growth in January frequently surprises to the upside and doesn’t warrant any change to the change to the baseline forecast.
It’s also likely that 2Q22 payrolls grew slower than initially reported, as Barclays pointed out this week. Still, today’s report basically paints a picture of a US economy still humming nicely along. Which is odd, because a lot of people said that the US was facing a recession last year, or was already in one. The Heritage Foundation even dubbed it “Biden’s Recession”.
The US’s GDP did decline for two consecutive quarters last year, the traditional definition of a recession. But even if the jobs market was weaker than initially reported in 2022, the latest data shows that weakness was shortlived. And the National Bureau of Economic Research hasn’t made an official recession call.
Last year, on the other hand, recession vibes were almost off the charts. Here are Google searches for “recession” exploding, surpassing even the Covid-induced peaks of 2020 and the global financial crisis in 2008.
The media, as is its wont, did not help:
Household confidence, naturally, slid through the year (although inflation may have been a bigger factor here):
Even CEOs seem to buy into the recession narrative. Here are mentions of “recession” in earnings calls, which spiked in early 2021 and remained remarkably common through that year and 2022.
Are we jinxing things? Quite possibly, and if the (highly visible) tech sector is anything to go by, some companies are beginning to find way to cut back — even if that isn’t translating into the headline figures.
It’s certainly too early to call a ‘soft landing’. What’s sauce for Joe Biden is . . . not sauce for Jay Powell and the Fed, who must be worrying about the inflationary threats from a tight jobs market.
All this week, FTAV’s inbox has been stuffed with commentary about central banks finally turning a corner on tightening. But what lies beyond is unknown.
