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Job growth sees another weak month in August as payrolls rise just 130,000

Job growth sees another weak month in August as payrolls rise just 130,000

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  • Ah yes, another weak month increasing yet again the record number of people employed in the US.

    Certainly calls for a doom and gloom headline.

    This statement is incredibly telling:

    “If we weren’t already talking about recession risk and already looking for signs of a slowdown, we wouldn’t start today

    Ah yes, another weak month increasing yet again the record number of people employed in the US.

    Certainly calls for a doom and gloom headline.

    This statement is incredibly telling:

    “If we weren’t already talking about recession risk and already looking for signs of a slowdown, we wouldn’t start today because of this jobs report,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman.

    They’ve (the financial geniuses) been harping on recession risk and looking for signs of a slowdown or any other negative they can find since trump was elected. Eventually there will be some genuine negative financial news and they’ll all be like: see, we were right! Not even the weatherman can get away with being as wrong as the financial geniuses.

  • Historically with any slowing jobs reports, we get reports about either recession is coming or it's not--it's typical journalism because they're in the business of generating interest in their articles. People just need to stop politicizing and being divisive on everything--there is no Trump mentioned

    Historically with any slowing jobs reports, we get reports about either recession is coming or it's not--it's typical journalism because they're in the business of generating interest in their articles. People just need to stop politicizing and being divisive on everything--there is no Trump mentioned in this article.

    So, let's discuss some facts and look at history:

    Great Depression: tariffs to protect American businesses and farmers, added considerable strain to the international economic climate

    Today, we got tariffs, and they're bad for trade and economic growth and it doesn't seem to be getting better here.

    Great Recession: 2007 leading up to the Great Recession the average monthly jobs number was 95,000 (all data from BLS) and that was a slowing down of job numbers.

    2007: 95,000

    2008: -298,000

    2009: -424,000

    2010: 88,000 (at this time economists were saying we needed 400,000+ growth in jobs per month over next 2 years to make up lost ground from the Great Recession)

    2011: 174,000

    2012: 186,000

    2013: 194,000

    2014: 241,000

    Jobs are a lagging indicator--it doesn't reflect the current period, but previous periods of business activity, confidence, etc. Businesses start ramping up hiring when they see business activity increasing, etc. It's also vice versa, business slow hiring when they see business activity decreasing.

    So job numbers declining or slowing down is not a good sign--it never is. If you look at the Great Recession, all it takes is a crisis of some sort that economists didn't foresee or predict to be the achilles heel in a slowing, weakening economy.

    What is different and very worrisome vs previous recessions are:

    - Fed funds target rate have been close to zero for 2009-2015, this economy was built on zero percent interest rate, look at data from 1960 to 2019 you'll see how low interests have been the previous two decades compared to 1970s-1990s—the Fed has less space to manuever with interest rate cuts and 2019 is already very close to zero percent again

    - We exhausted our tools to combat this by significantly increasing our budget deficit ($3.7 trillion is a record high and almost doubling Obama's and this is during when we are NOT in a recession)--it'll be super hard to spend our way out of this like how Obama did to help combat the Great Recession (which wasn't a normal recession)

    - Inflationary risks are very real if we add even more money into supply (we have created $3 trillion more dollars in the US alone)--if consumer prices see inflation, that's going to really hurt and slow our economy since we're such a consumer-driven economy

    There is the potential for an inflationary shock across all prices, including everyday consumption items. Now the trigger that'll cause this we might not see coming like how we didn't see the subprime crisis coming since most mathematical models didn't catch the weak data-points there.

    Let's hope whatever this trigger is doesn't happen and we just get a mild recession, not something as acute or worst than the Great Recession we just had.