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“The indictment, in a lot of ways, that was the turning point.” – Jeffrey Skilling
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History has a way of repeating itself, and just as the FTX bankruptcy is all anyone can talk about these days, it was 21 years ago today that Enron filed bankruptcy, and it was 14 years ago this month that the Madoff Ponzi scheme broke. There’s something about December and bear markets! The only difference between FTX and the Enron and Madoff scandals is that back then the masterminds of the scandals weren’t doing everything they could do to get in front of a camera, and the media wasn’t obliging them. As they say in show biz, though, any publicity is good publicity.
In any discussion of the economy these days, economists typically cite employment as an area of strength, and rightly so. When many other sectors of the economy are contracting or simply stalled out, people look for bright spots. At 3.7%, the Unemployment Rate and jobless claims are at the low end of their historical ranges, and the number of job openings in the JOLTS report is still 2.5 million above its pre-COVID peak. That’s the good news.
Less positive is the fact that momentum in US employment is clearly weakening. We saw it yesterday with Continuing Jobless Claims which are up over 20% in the last six months. Even the JOLTS report, which showed levels of job openings well above their pre-COVID peak, is still down 1.5 million from its high this March.
Today’s employment report will show another example of the labor market losing steam. Economists are forecasting Non-Farm Payrolls to 200K during the month of November, and any reading below last month’s level of 261K will be the weakest monthly reading since the end of 2020. The trend is clearly lower as the three-month average has been steadily trending lower all year.
The weaker momentum within the employment sector also comes as workers are making less. For nearly two years now, wage growth hasn’t been enough to even keep up with inflation. Over the last two years, y/y wage growth adjusted for inflation has declined at an average rate of just over 1%, and November’s report will be the 20th straight month that the reading was negative. And this is the good news!
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