On Friday, August 6, 2021 the BLS (Bureau of Labor Statistics) released the prior monthly (July 2021) employment related report. It is worth noting these are preliminary and will be adjusted in future months, but usually major adjustments are not in the picture….
Bottom Line:
943k hires in the month of July … NICE
5.4% Unemployment Rate as of July …Getting there (lower is better of course)
10 Year Treasuries Took note
BLS Unemployment Report for July 2021
The following Chart from the BLS may look unenthusiastic at first glance….. but hold on!
With the DRAMATIC volatility from the past year, the longer term chart does not give a true recent view…. Let’s look a little closer …. Much Better!
In much the same vein as above, the year view of the Unemployment rate does not look like a big deal as can be seen by the next chart!
On second thought, again with a closer view….. NICE! (We want a downward trending chart when measuring Unemployment)
10 Year Treasuries Wake Up
A measure of future expected growth, after some wrong sided players (shorting the 10 year in expectation of much higher rates faster) blew up pushing yields possibly incorrectly lower….
In case you were busy last Holiday Shortened week (Hope you had a Happy Fourth of July) and missed a couple of important data points …. here they are
MBA Purchasing Index Continues to Do Great
First Mentioned here, back in March, last week (7-1-20) another very strong reading of the MBA Purchase index, which is an index that tracks purchases of homes, (Excludes Refinances) and gives a good future expectation view of home movement, value and transaction…
On a personal, in-house perspective, with an unusually high 20 and counting residential home movements SO FAR this year, we are seeing a liquid, fair and fast paced market!
Employment Update – BLS
Then, the BLS (Bureau of Labor Statics) released their update on the unemployment rates…
Yes it is still high, but the drop caught many by surprise and was a much greater drop than expected!
A pretty Good Good economic release week…again, that may have slipped by you!
Have a Great ” Good Last Week Economic Numbers” Monday!
Last Friday, June 5, 2020 the Bureau of Labor Statistics (BLS) released its regularly schedule monthly report of hiring and firing report nicked name “The Employment Situation”
Closely followed as a broad measure of the health of the economy and the consumer, experts (so called) from all ports of finance (Economist, bankers, investment bankers, brokers) tally their estimates of what the monthly reading will be.
In all fairness, due to bread crumbs from other reports, usually the forecasts are very close and often garner a quick glance and a carry on to other items attention span.
Fridays expectations were for a loss of just over 7 million folks.
Oops – What Happens When You Miss Big?
With an expectation of ( -7 million) more job losses and announcement of +2.5 million gains, caught Market Participants WAY off guard…
Interest Rates took note as well… which is very logical, as rates go up as economic conditions expand…
Likely ahead of ourselves a bit, but heck it is a start….
Bumps most certainly still ahead… but still a start…
Post great recession, the Unemployment rate went into double digits … +10% …. Many including us thought the new natural level of unemployment may be near 6% – prior to the great recession most believed 4% would be the all time low…
3.8% Unemployment Rate
The regular monthly Employment report from the Bureau of Labor Statistics reported last Friday, June 1 that the Unemployment rate hit 3.8% — Yes 3.8%!
Wow….
Naysayers would say this will put pressure on wages, pushing up the CPI – Consumer Price Index – indirectly forcing the FOMC (Federal Open Market Committee) to raise rates fast — possible inducing an inverted yield curve…. leading to a recession… got that… sorry for the long domino effect– but this is how Wall Street thinks… perception can become reality… Let’s check the CPI …
The CPI looks fine and has not moved up too much. Here is a possible reason why…
Jolts – Job Opening and Labor Turnover Survey
Essentially this is a relatively new statistic that many follow included the FOMC, that shows what the US Economy is producing in the form of jobs…. an increase in this chart means more jobs are available…
Consumers are the ultimate driver of an Economy, especially the US economy. By most estimates, the consumer and his/her spending makes up over 66% of the US GDP (Gross Domestic Production) a broad measure of economic health.
Here is an interesting analysis of the Bureau Of Labor Statistics (BLS) most recent monthly Employment Report … mentioned on our “Break In” of our Friday post.
Employed Consumer
The highest, most blunt view of employment is the Unemployment rate, usually figured in % total unemployed.
At 4.4%, the unemployment rate has fallen to a rate many, including ourselves thought maybe possible via post great recession!
The little Economy Engine that could!
Take this job and shove it
Confident enough to walk away from the job? Sure looks like it.
Said another way, individuals have enough confidence in finding a new job, they are not afraid to walk from their current one.
A new high soon?
Job Opening- aka JOLTS
Brought to the attention of many by our current Federal Reserve Chairwoman, Janet Yellen, the job opening report also known as JOLTS report is showing clear evidence of job opportunities.
This chart helps explain why workers are not afraid to walk from their current job as well (prior chart.)
Jobs are abundant!
Total Employment to Population
Certainly the Great Recession has had lingering effects. Focusing on the move upward since 2009, one can see the line heading in the correct direction, possibly giving confidence to those above who are leaving their current job.
Bottom line, a more confident, job opportunistic consumer economy!
Full Circle Now- Higher Spending? Higher GDP?
Going back to our original statement, with so much tailwind for the consumer coming from the employment of the US Economy, it would not be a stretch to think higher spending is in the cards, and a better GDP!
As we had mentioned earlier when an odd economic report occurred, we noted it likely inaccurate. Today the report for the most recent month was released and it looks like the two will cross each other out – we will discuss in greater detail shortly.
Somber Friday
We were stunned at the shooting here in our home town of Dallas Texas last night. Our office is not close to downtown, and thankfully our friends in that area are safe and sound as well as ourselves. Thanks to all of those who reached out to us!
We send the best wishes to the victims and the families of those who lost their lives or were injured in the shooting. So sorry this occurred!
What a different a month (or two) can make. Here is our March 2016, all new…trendy format Monthly Capital Market Review and last minute tax tips, along with a Video for your viewing and listening pleasure. Hope you are enjoying!
As Moto Moto said in Madagascar, these tips are so good we had to say them twice!
Our favorite tax savings ideas that still work for last year (2015 taxes):
Itemize your standard tax deduction
HSA- Health Savings Account
Fund an IRA
Simplified Employee Pension – SEP deduction/contribution against non W-2 income (1099)
Tax Fraud Alert
As noted here, last month we had our first incidence of fraud in February. We are now up to 9.5 so far, as we have one incident that we think was fraud, but could not be proven!
Be sure to keep your guard up!
Economic Update
PMI Manufacturing Index
PMI (Definition: The ISM manufacturing composite index indicates overall factory sector trends. The relevance of this indicator is enhanced by the fact that it is available very early in the month and is not subject to revision.) Graph from our friends at Econoday.
Less than 50 is contraction, greater than 50 is growth.
Employment Situation
While there was a small increase in unemployment claims late in March, the overall employment picture, via hiring, as can be seen below, again from our friends at Econoday, remains steady. It is worth noting, these reports can be volatile.
Capital Markets Update
Updated Support and Resistance
This Graph, included in our Newsletter, shows the updated Support and Resistance lines and levels of the current market.
As mentioned in our Yellen Speaks post, after telling capital market participants that slower rate increases were more likely (late 2015 she told the world to expect four increases, now only two) capital markets smartly broke through the lower upper resistance. Now, can we go to new highs ? Maybe …
Never go all in or all out !
Oil and Market Correlation Chart
For those that think oil does not affect the sentiment and capital markets, look at this chart from Liz Saunders :
Sorry for the motor mouth/fingers … there were a lot of moves worth noting, especially very near the end of the month !
The conspiracy theorists who wondered why a major Employment Report would be released on a market holiday (Good Friday) were rewarded with a bit of tasty news last Friday. Likely they will be out in droves today!
Weak Employment Report
With a street expectation of 247k jobs gained for the month of March a very low actual number of 126k was a surprise. Not all the news was bad, and we think this may be an aberration.
The blue line is the unemployment rate which continues to decline (good news.) Noting the last time we had a low report, orange line (August 14) a fast bounce back up to the 200k’s occurred. We think this may be the case again, as somehow energy prices and the strong dollar effects have seeped into this report.
Next months report will be even more important, but for now, unfortunately Janet Yellen, Federal Reserve Chair WILL NOT raise short-term rates if this continues.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
Continued Improvement in the US Economy … Monthly BLS Employment Report .. Unemployment Rate, Interest Rate Reaction
On Friday, August 6, 2021 the BLS (Bureau of Labor Statistics) released the prior monthly (July 2021) employment related report. It is worth noting these are preliminary and will be adjusted in future months, but usually major adjustments are not in the picture….
Bottom Line:
943k hires in the month of July … NICE
5.4% Unemployment Rate as of July …Getting there (lower is better of course)
10 Year Treasuries Took note
BLS Unemployment Report for July 2021
The following Chart from the BLS may look unenthusiastic at first glance….. but hold on!
With the DRAMATIC volatility from the past year, the longer term chart does not give a true recent view…. Let’s look a little closer …. Much Better!
In much the same vein as above, the year view of the Unemployment rate does not look like a big deal as can be seen by the next chart!
On second thought, again with a closer view….. NICE! (We want a downward trending chart when measuring Unemployment)
10 Year Treasuries Wake Up
A measure of future expected growth, after some wrong sided players (shorting the 10 year in expectation of much higher rates faster) blew up pushing yields possibly incorrectly lower….
From Business Insider here
A hedge fund reportedly lost $1.5 billion in a bond market short-squeeze as bets on rising rates turned sour
These Good Economic Numbers put yields on the move higher (far right of chart)!
Continued improvement would likely force the FOMC to slow asset purchases…. as discussed here much desired by many !
Have a Great “Good Economic News” and analysis Monday!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Retirement Planning
Tagged 10 Year Treasury, BLS, FOMC, Interest Rate, Interest Rates, Taper, Unemployment Rate, Unemployment Report