What's really going on in the labor markets

Daily Data: Supply is catching up to demand

In today’s dispatch:

• labor market data was bad in the good way (wut?)

• really, nothing has changed and everything is expected, iykyk

• immigration matters, a lot . . . but it may be reaching a saturation point

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What’s really going on with the labor market

Fresh jobs data came out on Friday and investors were sad/happy.

Sad, because there were ~60K fewer jobs than expected:

. . . and happy, because ‘bad news is good news’ and a slowing job market means rate cuts are back on the table.

To Random Walk, it’s all sort of stupid.

Why?

Well (a) the job numbers get revised all the time; but (b), and more importantly, nothing really has changed (and rate cuts have nothing to do with it).

The job market is doing exactly what a “gap closing, but not growing” job market would be expected to do. Eventually, without some other source of growth, it reaches a saturation point.

What does that mean?

Read on.

Tight, not strong (reprise)

The most important thing to know is that the job market was never “hot” to begin with.

The job market was tight because national aging, a colossal failure to babymake, and a “pull forward” of retirement (especially for no-college workers) created a “worker shortage.” Throw in an unprecedented demand subsidy, and it created all kinds of chaos.

But behind all the sound and the fury, the key observation is that while the total number of “jobs to be done” stayed roughly the same, the number of people available to do them, has been fewer than expected.

The data is pretty clear on this: