Reclaiming Common Sense

Memorial Day Week - A Slowdown in Data

A Chance to Publish the ADP Payroll Report Forecast Article

We started the week with Memorial Day and a time to remember those who lived, fought, and died for our country. I had the pleasure of attending two Memorial Day services. We received the preliminary First Quarter GDP data, the first revisions, as well as the weekly unemployment claims data. Finally, on Saturday morning, the May ADP forecast article was published.

(May 30) Thursday we saw the simultaneous release of the first revision to the First Quarter GDP values, plural, and the release of the Weekly Unemployment Claims data. "How Low does Unemployment Have to Fall" was reporting on the strong weekly claims data and asking two question: How low does the unemployment claims data have to fall to receive some attention from the media, and how low does it have to fall before the increase in the workforce population "forces the data" to creep higher than it is being recorded right now? Eight weeks so far this year with the non-seasonally adjusted first-time claims under 200,000 claims. This is more weeks than 2015, 2016, and 2017 combined.

(May 30) The second report released this past Thursday was the first revision to the First Quarter GDP report, also known as the Preliminary First Quarter GDP.  "Preliminary First Quarter GDP at 3.1%" discussed the headline Annualized GDP, the Same Quarter GDP, and the revisions to the first quarter data. All eight cylinders are firing: Annualized Personal Consumption Expenditures (PCE,) Annualized Gross Private Domestic Investments (GPDI,) Annualized Net Exports, and Annualized Government Consumption Expenditures (PCE,) as well as Same Quarter PCE, GPDI, Net Exports, and GCE. It also made an early projection that the Annualized GDP for second quarter could exceed that of 2018Q2.So much for a looming recession.

(June 1) The ADP Private Payroll report is usually published the Wednesday prior to the Friday Jobs Report data. The headline data from the government includes the Private and Public Sector data in the "non-farm payroll data" that normally is the headline number, even though former President Obama's "streak" data was the Private Sector data. This year, and since July of 2018, the ADP payroll data has grown at an annualized rate of at least 2.04%. The article "May ADP Forecast: All Sectors Up, 245,000 Added" found that, as a minimum, 180,000 payroll positions should be added during May. It also found that we could see an increase of over 227,5000 positions if we just kept up with the current year trend. It is even possible that we could see a value over 300,000.

The media were not able to "gin up" their 0.5% Annualized GDP that they wanted, so now they are ginning up their "inverted yield curve as precursor for a recession" talking point. This is very difficult, if not impossible to do, while consumer confidence is high, and while we are setting record levels of full-time employment for the current month. The ADP forecast examined the month to month growth expected and the same month growth changes, as well as the current year trajectory. A solid or strong ADP report this upcoming week, as well as a strong or solid government Jobs Report should assuage some concerns regarding a recession for at least a nanosecond. The "yeah buts" will come out within moments of the release of these influential reports claiming that this seasonally adjusted indicator or that seasonally adjusted indicator is showing signs of weakness. If it "bleeds it leads." If it's green they are mean.

It's the Economy.