From the Gospel according to the Fed, here is the multiplication of double jobs for you

The US job market runs in July: the non-farm payrolls data beat all expectations with a robust +528,000, a number that brought the unemployment rate to 3.5%. And Wall Street on a pause from the rally, depressed by the implicit consequence of a similar confirmation from Main Street: the bullish rate cycle can continue, so much so that immediately after the publication of the data, futures returned to price the hypothesis of another 75 basis points of increase for the board in September.

But those who thought that equity indices and bond yields would generate an earthquake saw his fears comforted in a matter of minutes. So much so that only the Nasdaq closed sharply in negative, not being able to take advantage of the usual short squeeze on Big Tech for a day, while the Dow Jones closed the last session in the red and the Standard & Poor’s 500 capped the red to 0.16%. And what made it change mood to the market, despite those 528,000 units that rained down from the sky like a cold shower on the macro indicators of the last week, the same ones that seemed to confirm a slowdown due to the only support for the policy hawk by Jerome Powell?

The nature evangelical of that data, too mystical to convince pragmatists to the point of iconoclasm like investors. And these two graphs

Comparison between the results of the two internal surveys of the Bureau of Labor Statistics

Comparison between the results of the two internal surveys of the Bureau of Labor Statistics
Source: BLS / Zerohedge

show what the busillis background: the figures do not add up. On the contrary, it is the entire US employment trend and its narrative that show something interrupted towards the end of March. In fact, it is necessary to know that the Bureau of Labor Statistics (BLS), the government body that tracks the dynamics of work and processes the data of non-farm payrolls, bases its preliminary and real-time estimates on two internal polls, the Establishment and the Household. The difference is already in the name: the first refers to companies in the non-agricultural private sector (factories but also offices and retail shops), while the second is part of the Current Population Survey and, in fact, addresses private citizens.

As you can see, since last March the red line of the Household Survey relating to the occupancy rate has entered the flat encephalogram mode, while that of the Establishment has continued to grow, generating a gap that is always widening and that in the mapping published yesterday reached a discrepancy of 1.5 million. And the second graph makes the nature of that underlying inconsistency even clearer: in the face of loss of both part-time and full-time jobs, America has experienced a veritable explosion of multiple jobholders. That is, citizens who do at least two jobs for a living.

In itself, a double reading fact. If on the one hand it would confirm the euphoric nature of the US labor market, capable of guaranteeing an almost unlimited supply of opportunities, on the other hand it crystallizes not only the growing weight of inflation on purchasing power but also the basic criticality of wage doping generated in the months of the pandemic support plans and then withdrawn suddenly, leaving many incomes (and expenses) at the mercy of a drastic return to reality. Hence the contemporary explosion of revolving credit. Translated, the massive use of credit cards to make ends meet.

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And here comes this third chart

Trend in the number of employees with multiple and full-time employment contracts

Trend in the number of employees with multiple and full-time employment contracts
Source: BLS / Zerohedge

seems to offer us a first reason for Wall Street’s newfound optimism, after the initial crush following the publication of non-farm payrolls: the number of citizens who could count on multiple jobs and who see both primary and secondary as full-time has reached the absolute record. Hardly credible. And even less legible as a symptom of a labor market healthy. In short, at a guess the BLS from March onwards – coincidentally since the Fed’s narrative about the transience of inflation began to lose momentum – focused solely onprocessing data from the Establishment Survey, in fact by designating a record-breaking employment dynamic on the basis of creative accounting. Just what the Fed itself needed most, having to justify a rapid and almost unprecedented upside plan in the face of pre-recessive macro prospects.

In short, what is good for media headlines can hardly fool a market that has been living on the market for a week now. who is there, forced to deal with geopolitical variables which, instead of shrinking, seem to multiply and worsen every day. Finally, this graph

confirms the skepticism of investors not so much and not only on the goodness of the BLS statistics, as to the real willingness / possibility of the Fed to continue towards the Fed Funds target of 3.5% by the end of the year. During the pandemic, the canary in the mine of the real estate boom was the town of Boise in Idaho, a remote urban and human agglomeration that experienced a real demographic boom due to foreign workers. Well, last week Boise has seen the average prices of 61% of available properties undergo a cut and become the first of this ranking of real estate discount on 97 US areas mapped.

Moreover, in June and on an annual basis, the number of properties on the market increased by 179% according to official data from the Boise Regional Realtors. In short, yet another cyclical US real estate bubble is experiencing its epilogue. And the pin that generated it was the Fed’s policy of sprint hikes. Will it really be possible to continue, risking that a deflation so far controlled will turn into an explosion? Wall Street seems to be betting not.

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