Job openings are the key reason many people believe a recession is not in the cards. OK, what if?
Nonfarm Payrolls data from BLS, chart by Mish
To recover jobs to the level they were at pre-Covid, the economy needs 152,504,000 minus 149,721,000 jobs (2,783,000).
But to recover to the trend the economy needs 6,279,000 jobs.
Job Openings
Job openings data from BLS, chart by Mish
What if instead of firing millions of leisure and hospitality workers, the openings vanish?
Will we need construction workers if housing slows?
What about manufacturing jobs if the automotive sector takes a dive?
Comparison to Double Dip Recession
Nonfarm Payrolls data from BLS, chart by Mish
If we look back at the 1980-1981 double dip recession, the number of jobs lost was minimal.
The 1980 recession gained jobs for the first two months of the recession then compared to pre-recession lost less than a million jobs.
The larger 81 recession lost less than 2 million jobs.
In both cases, the number of jobs rose before the recession ended in stark contrast to the housing bubble bust.
Nonfarm Payrolls 2006-2014
Nonfarm Payrolls data from BLS, chart by Mish
Comparison
- The housing bubble "Great Recession" suffered immense job josses with a very slow job recovery.
- The double dip recessions in the 1980s had small job losses and speedy recoveries.
I expect the next recession to look much more like the 1980s inflationary recessions than the housing bubble "Great Recession".
I also envision very steep stock market declines. As a result of the stock market wealth impact, people start looking for work even some of those who retired early.
So while the employment loss may be relatively small, the change in unemployment rate is likely to be more significant.
What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?
The answer is nothing or next to nothing. Rates hikes will not impact inelastic items.
For discussion, please see What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?
Bubbles Will Pop
If you think the Fed can fix decades of easy money and reckless Congressional spending while not remotely understanding inflation, you are only nuts.
Please note Most People Have No Idea How Much Stocks are Likely to Crash
This material is based upon information that Sitka Pacific Capital Management considers reliable and endeavors to keep current, Sitka Pacific Capital Management does not assure that this material is accurate, current or complete, and it should not be relied upon as such.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.