REPLAY| Monthly | Employment Conference Call | The Surprising Strength of the Labor Market—Still? The Summer Jobs Market – 8/4/23

Posted August 9, 2023 by rvillareal

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The Surprising Strength of the Labor Market—Still?  The Summer Jobs Market

• Labor Market (July)—Still Surprisingly Strong?  Softening?—The Data
  • Jobs (Nonfarm Payrolls, Cos.); Persons Working and Looking (Hh. Survey); Supply—Labor Force, Participation Rate, Employment/Population Ratio
  • Unemployment Rate—A Fully Employed Economy Still
  • Wage Costs (Avg. Hrly. Earnings, AHE) and Cost-Push Inflation—There or Not?
• Labor Market and DE Basic Forecast—“Soft Landing” (60% Odds) Still—Macro-Risk Alternatives (Recession, Odds 25%-30%)
• Surprising Strength of Labor Market—Puzzle to Many—Some Reasons
  • Demand-Driven Expansion and Interest Rate “Inelasticity”
  • Changing Structure of Economy and Labor Markets
    • “Techno-Centric,” Digitization, AI
    • Services More-and-More
    • Small Business Formation This Time and Persons Working
    • “Loop”—Jobs and Persons Working to Disposable Income to Spending to Jobs and Persons Working
• Fed Policy Outlook and the Labor Market—Surprisingly Resilient Economy, Falling Inflation, Essentially Full Employment Fed Themes
  • FedThink—How Much More Tightening?  Smaller Doses, Spread Out, Higher For Longer
  • Fixed Inflation Targeting Moving Toward Flexible Inflation Targeting?  Away From 2%?
• Markets
  • Still “Bear” Fixed Income and Summer Rally “Bull” Equity Market
  • Fed Funds Rate Peak 5-5/8% and Hold Well Into 2024
  • 10 Year U.S. Govt. Uneven Movement Toward 4-1/2%
  • Strong S&P 500 Op EPS and New, Higher Fair Value Ranges