Jobs -- Say What You Want, But This Suggests Surging US Economy And Force Participation Suggests Wage Inflation Not An Issue -- April 5, 2024

Locator: 46922ECONOMY.

Updates

April 5, 2024: others are suggesting something else. Does part-time vs full-time jobs matter? If accurate, a very, very interesting data point.

April 5, 2024: the jobs report does one thing -- puts a final nail in that coffin burying all that talk about a recession. 

I would go one step further -- it will put a nail in that coffin burying all that talk about "stagflation."Call it what you want. If you want to call it stagflation, go ahead. But for me, as an exuberant American citizen and an exuberant investor, I'll take MPC up $4 / up 2% regardless what folks want to call it.

April 5, 2024: at mid-day, Dow is up 400 points after the jobs report. 

One could argue that traders have given up on waiting for a Fed cut. The jobs report shows an incredibly resilient economy with no evidence of wage inflation. With regard to the market, two things going on:

• good companies aren't waiting around for the Fed to do something; they're executing their plans; and,
• mom-and-pop retailers are taking advantage of market pullbacks to buy more underpriced shares

Original Post

Bottom line: US economy is growing strongly but it won't be the "kind" of growth that causes inflation, for two reasons:

• supply chain problems resolved; exhibit A: price of new cars;
• don't take this out of context; it doesn't mean prices will drop; it doesn't mean that housewives will be surprised how inexpensive it it is to go grocery shopping; it simply means prices won't grow as much as they did during the pandemic -- which is still fresh in everyone's mind
  
• wage growth held in check by immigration surge (this tells me again, White House knows more than we do); labor force participation has actually increased;
  

BLS: link here. 

DJIA: after much-anticipated jobs report, DJIA opens up 38 points; muted response. 

Next: Cramer very subdued; concerned about Mideast.

Autos: back to normal; supply chain fixed; new car prices coming down quickly.

• used car prices came down significantly a few months ago

Analysts' summary:

• great numbers; surprising numbers;
• folks under-estimating positive effect of immigration;
• no signs of worrisome wage inflation; immigrants stepping into take jobs otherwise hard to fill;
  
• consumers feel very well off; spending; the word "resilient" not used by any analyst but obviously there
• but look at that: analysts missed estimates by 50% -- how can they be so far off
• expected: 200,000 new jobs
• actual: 300,000 new jobs
  

Jobs report and market reaction: link here.

• expectation: +213,000 jobs
• expectation: fewer than the 275,000 new jobs in February 
• numbers better than expected; making Fed decision more difficult
  
• unemployment: 3.8%; down from 3.9% last month; this was quite a surprise
  
• a whopping increase of 303,000 jobs
  
• wages: right in line 
• force participation up
• Treasuries jump
• force participation: increases which is a huge deal; 
• Steve Liesman suggests this may be the big stroy of the day
• Rick: says we've been here before and not quite as exuberant
  
• working from home? can now hold two jobs
• other analysts
• 1 - big number, huge number, but not inflationary
• 1 - is immigration playing a role filling some of these jobs
• 1 -data won't help Fed make decision
• 2 - economy being powered by two things
• fiscal policy
• immigration
• huge reason for all the good news regarding economy and 
• higher for longer; no longer anyone should think about 2 rate cuts
• 2 - we need to see continued CPI progress, blah, blah, blah
  
• 3 - no rate cut any time soon
• 3 - great numbers; economy doing very, very well
• 3 - economy being led by consumer; consumer continuing to spend
• leisure and hospitality continues to lead which is great
• earnings will continue to be good
• market will go higher: financials, energy, infrastructure, not tech
• remains a buyer
  

Before release of data:

• DJIA: +100 before release of data

Immediately after release of data:

• DJIA: +45

After time to digest:

• DIJA: +120

Dallas Fed President: teases no rate cuts this year, and possibly even a rate increase -- CNBC, 10:03 a.m. CDT, April 5, 2024. Liesman considers her the most influential, after JPow, of course. She is generally dovish, but becoming concerned how fast the economy is growing. Remember, she's from Texas, where economy is surging.