Jack Dunn - Reclaiming Common Sense

 This column has already published two articles in advance of the December Jobs Report, "Dec. Jobs Forecast: Up is Really Up" and "Expect Strong Dec. ADP Report." Both data sets point to a potentially strong December Jobs situation. Last December's Jobs Report article "Deceptive December Jobs Report" looked at the slowing economy and asked if there was a "2% tipping point." The tipping point is the annual level of non-seasonally adjusted (NSA) current employment Statistics (CES) private sector worker growth. We saw peak NSA CES worker growth during the Obama administration during February of 2015 when we had an annual growth rate of 2.60%. The prior best months of private sector worker growth were during February and March 2012, as we were still recovering from the Great Recession. What is happening now?


President Trump has added the Most Non-Seasonally Adjusted CES workers during a President's First ten months in office since 1981. The "Five Presidents at ten months" article details how the raw number of workers is greater for President Trump than President Clinton and how the growth rate for President Clinton's first ten months is greater than President Trump's growth rate.  The economy, as measured by the Gross Domestic Product, was decelerating under President Obama. We have now seen back to back annualized growth rates of over 3% and may see an entire year over 3% during 2017 when the final data is revealed this Spring. This month we will receive the Advance Value for the Fourth Quarter. More workers - More Jobs - More Economic growth as more people have more money to spend.


We had declining participation through January of 2017.  The "Four Presidents at 96 Months" article detailed how the participation rate could have been reported at 62.29% or 62.45%. Participation has been rising since that time, same month over same month. We also saw historic levels of multiple job workers. Some people were over-participating while others were under-participating. What was interesting about the January 2017 Jobs report was the non-seasonally adjusted CES data did not drop as much as "usual."


The Growth rate has been under 2.00% since May 2016. If May 2016 sounds like a familiar point in jobs report history it is because during the June Jobs report the May SA CES Private Sector Worker data was revised lower and the Obama Consecutive Months of Job Creation Streak ended (until phantom revisions took place at the end of the year.)


We are at a comparable growth rate as we had during the end of 2004. We saw some considerable job gains through July 2007. President Bush had his 53 consecutive months of non-farm payroll streak during this period of time.  This current streak has been slowing, while it has been extended. Is the growth rate slowing because the economy is so large? Is it going to hit the accelerator after the first of the year as people start hiring for the Spring and Summer markets?  Something has to change.


The longest streak of NSA CES worker growth was April 1992 through May 2001. The growth cycle started under President George H.W. Bush and was maintained and expanded upon by President Clinton. How long it can be maintained has yet to be seen. New home sales are expanding. Existing Home Sales are expanding. the Retail industry is seeing its best year ever. Inflation is bifurcated between Service inflation and commodity deflation. Sooner or later other reporters will have to start paying attention to the data instead of the reports.


I have seen a similar graph to the one at the head of this article on another website. I am flattered. We need to discuss the data. The articles that are written as forecast articles are written to prepare readers for good news and not so good news. Tomorrow we will receive unemployment claims data as well as the ADP jobs report. Unemployment is going to rise through the first week of January. It has for "all time." The peak January unemployment level has been dropping since 2009. Will we see another drop in the peak January continuing claims level this January. It will take a few weeks to find out. This week we receive the "fifth week of January" first-time claims data and the fourth week of January continuing claims data. Two weeks will pass before we have the continuing claims data in hand.  Stay tuned.


It's the economy.