Strange Jobs Report

You can't make this stuff up. On today's show we are taking a deeper look at the incredibly strong January jobs report that 517,000 jobs were created in the month of January in the US. 

The report was at odds with the daily reports of layoffs in multiple industries across the nation.

So why do we care about this? After all, we’re real estate investors. Well, the Federal Reserve is setting interest rate policy in large part to cool the jobs market so that we don’t experience a 1970’s style wage price spiral. Since interest costs are front and center for us real estate investors, the employment numbers could be a leading indicator of what the Fed might do with interest rate policy based on employment statistics.

The press have a bad habit of only focusing on one of the two surveys that are conducted on a monthly basis. The household survey tells a very different story than the employment report. It’s a bit like selective truth. The employment report is not the whole truth. It’s a half truth. The other half of the truth is the household survey which continues to show falling work force participation.

The narrative is that a strong jobs market will feed the narrative that central bankers will need to raise interest rates even further to combat inflation. A strong jobs market puts too much negotiating leverage in the hands of employees and that will ultimately fuel a wage price spiral.

The question is, what could be behind this incredibly strong employment report?

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Host: Victor Menasce

email: podcast@victorjm.com