To receive weekly insights and a filtered lens on macroeconomic and financial market analysis
Recently in our curated content we discussed the healthy US labour market, especially among the low-wage demographic. To bring a contrasting view, in this podcast Torsten Slok, Chief Economist at Deutsche Bank Securities, looks at worrying slower hiring statistics that point to a weakening of the US economy.
Slok highlights major trends showing a decline in job growth from 225,000 six months ago to around 150,000 currently. This is a sharp decline in income with average hourly earnings in September at 2.9% despite peaking around 10 months ago at 3.2% and a slowdown in real personal consumption to a 5-year low of 2.1%. He largely blames the ongoing trade war.
Why does this matter? The US labour market doesn’t look as rosy as the employment report portrays it. The headline numbers we mostly see are based only on one of the report surveys, which is asking details from companies on their latest hiring and redundancies. These can be inaccurate.
The second survey, which surveys households and individuals, reveals a quirk in the data and hides some underlying signals and trends. Companies are putting a break on Capex and hiring. Combined with the decline in ISM numbers and weak personal consumption, there could be an underwater recession tide forming.