In response to a rumor about his death, Mark Twain was supposed to have said: “Reports of my death have been greatly exaggerated.” In fact, the actual quote was: “The report of my death was an exaggeration. Either are pretty witty and fairly apropos when describing or discussing the US economy. Despite any number of “bricks in the wall of worry,” we just keep chugging along.
This morning the Bureau of Labor Statistics (BLS) released ‘The Employment Situation – January 2020.’ In it, the BLS estimates the economy created 225K net, new payroll jobs last month, and the Unemployment Rate ticked up to 3.6%, from 3.5%. That slight increase is almost completely negated by the fact the Labor Force Participation Rate increased 0.2%, from 63.2% to 63.4%. This is the highest participation rate since June 2013. Further, the Employment Population Ratio (EPR), the percent of working aged Americans holding down employment, increased to 61.2% from 61.0%. This is the highest this ratio has been since November 2008.
To top it off, wages increased 3.1% from last January, which is higher than the official rates of inflation. As a result, this combination of growth in real wages AND an increase in the EPR will result in an increase in household income in the US for January. In a consumer driven economy, this is obviously very good news.
Here are some pertinent observations:
- Again, the economy created 225K net, new payroll jobs in January 2020.
- The monthly average for 2019 was 175K.
- Private nonfarm payrolls increased to 106.441 million. Let that number sink in for a second.
- “Notable job gains occurred in construction, in health care, and in transportation and warehousing.”
- The Unemployment Rate for ‘ages 25 years and over’ remained low at 2.9%.
- The Unemployment Rate for workers with a bachelor’s degree and higher remained low at 2.0%.
- The Unemployment Rate for workers with ‘some college or associates degree’ remained low at 2.8%.
- ‘Average Weekly Earnings’ increased to an all-time high of $975.49.
All told, this was a pretty good report, which suggests the US consumer should have enough strength to carry the load for the remainder of the economy during 1Q 2020. This is a good thing, as it appears ‘business investment’ might be a tad weaker than we would all like…at least at this time. Regardless, please know any news or reports of the death of the US economy would appear to be an exaggeration.