Payroll employment rises by 353K in January; unemployment rate remains at 3.7% | Hacker News Reader

Payroll employment rises by 353K in January; unemployment rate remains at 3.7%

bls.gov

56 pointsimpish9208176 comments

Recent post from a weblog I follow, "This is the Best U.S. Economy Since the 1990s":

* https://awealthofcommonsense.com/2024/01/this-is-the-best-u-...

The main pain point would probably be housing prices/costs/price-to-income rations:

* https://www.jchs.harvard.edu/blog/home-price-income-ratio-re...

Edit: also, the run-up in food prices over the last little while is not great either (this is global phenomena AFAICT, and not US-specific). Hopefully inflation stabilizing will help, and wage gains will catch up over time.

Do Americans feel like they re in the best economy? (Here in yurop it's doom and gloom nothing like the 90s)

Public perception frequently doesn't match reality. Crime is a similar situation; nightly and 24/7 cable news highlight lurid cases six states away, so large swaths of the population feel unsafe despite living (statistically) in one of the safest societies ever to exist.

A handful of our cities have the worst crime in years, places like Seattle in a generation. It’s more that statistics don’t match up with people’s experiences because they are skewed by combining entirely unrelated places together. Similarly, you can claim it’s the best economy but lots of people are not working the kind of jobs they normally would (and not just in tech) and/or are working multiple crappy jobs so unemployment rates can be deceptive when trying to understand sentiment.

Public perception matches people's experiences. That may or not match the measures that economists and rich people care about, like GDP or stock market gains.

Down on main street, people are cutting back because they can no longer afford the lifestyle they used to afford.

Edit: This has been discussed many times here, so I can only assume the downvoters don't care how "the other half" lives.

Homes [for sale] “unaffordable” in 99% of nation for average American

https://news.ycombinator.com/item?id=37708109

Housing is now unaffordable for a record half of all U.S. renters

https://news.ycombinator.com/item?id=39128859

US inflation means families are spending $709 more per month than two years ago

https://news.ycombinator.com/item?id=37112604

But sure, there's another perspective that sees "the Best U.S. Economy Since the 1990s".

> Public perception matches people's experiences.

It really doesn't; confirmation bias, recency bias, propaganda, etc. all play significant roles. Eyewitness testimony is remarkably inaccurate.

You don't give people enough credit. Yes, there's a lot of gaslighting and propaganda, like cherry picking favorable economic statistics (as here), but people generally see through it.

Interestingly, we also see both recency bias and confirmation bias here as well. This very recent statistic confirms what some people would like to believe.

> That may or not match the measures that economists and rich people care about, like GDP or stock market gains.

If you don't think that positive GDP growth is good, wait until you experience negative GDP growth. :)

As someone who has a few more decades until retirement, I could personally go with cheaper stocks so I could buy more know for future use, but I'm sure my older (some-retired) relatives feel differently about market downturns.

> Down on main street, people are cutting back because they can no longer afford the lifestyle they used to afford.

Depending on the lifestyle (or parts thereof) in question, this may not be a bad thing. Certain lifestyle (aspects) may be imprudent, e.g., "How Much is That $70,000 Truck Costing You?":

* https://awealthofcommonsense.com/2024/02/how-much-is-that-70...

GDP is a monetary measure, it measures market value. So most of regular infrastructure does not add anything to GDP, public schools for example. Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

> Depending on the lifestyle (or parts thereof) in question, this may not be a bad thing. Certain lifestyle (aspects) may be imprudent,

I guess he was talking about people that cant afford a 70000 truck at first place. Some people on rich countries like Brasil, 11th GDP in 2022, were just not able to afford food.

> So most of regular infrastructure does not add anything to GDP, public schools for example.

But building a new school, or bridge, or factory, or repaving a road to fix potholes, does add to GDP.

GDP is a measure of economic activity, and having positive activity is generally a good thing. (Though some is not: if there's an oil spill, that will increase economic activity due to having to spend money on the clean-up measures.)

> Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

If you think poor people have a hard time with positive GDP, do you think they'll have a better time when it's negative?

The problem is that GDP doesn't measure the distribution of economic activity.

And reducing economic inequality might reduce GDP even as it improves the lives of poor people. Forcing people to work harder is good for GDP even if it isn't the best thing for the workers.

Can GDP be gamed and overemphasized? Yes.

Is America gaming and overemphasizing GDP? I don't think so. We have all kinds of economic measurements, and the one most people seem to be discussing today is inflation.

As long as we don't go stupid and braindead, and consider the overall economic picture, we'll do fine. We also can't ignore the best data that's collected or consider it conspiracy-laden fakes. But we also need to have enough skepticism to make sure our numbers are legitimate.

There's certainly people who fail on both sides. Overly trusting one number (ignoring all others) for the sake of their arguments. Or alternatively, ignoring inconvenient numbers (well, inconvenient for their side of the argument).

> Positive GDP is an important measure on Capitalist system but it does not reflect fully in the life of most poor people.

You can also measure GDP in less-than-capitalist systems.

You are right that GDP is a proxy for stuff we actually care about. But it tends to correlate really well with all the things we do care about.

>Public perception matches people's experiences.

Going back to the crime example, was this true? People's perceptions contradicted crime statistics. Are you claiming that the crime statistics were wrong and people were somehow getting increasingly victimized?

The FBI crime reports indicate that crime went down in 2022. The National Crime Victimization Survey indicates that crime went up in 2022.

For example, the FBI reports state that total violent crime went down by 2% in 2022. The victimization survey states that it went up by 75%.

The victimization survey also indicates that people are reporting a smaller percentage of crime to the police.

See, this is a great example of how carefully selected data causes a false perception. The increase you cite is charted on https://ncvs.bjs.ojp.gov/quick-graphics. It looks like this: https://imgur.com/a/6dgFRrp

That chart gives me the perception that crime went up in 2022, which is the perception I get from the victimization survey data I mentioned, and which is opposite of the perception I get from the FBI crime report data that says that violent crime went down in 2022.

What is the false perception you think people get from "the FBI reports state that total violent crime went down by 2% in 2022. The victimization survey states that it went up by 75%"?

The chart reveals that the "violent crime victimization 'went up by 75%'" statistic reflects a level that is still historically among the lowest in decades. The same data also could be described as "back to 2018's already-low level" or "nearly 1/4th the amount of crime as the early 1990s".

Many urban areas saw an increase in crime starting around 2020. When it comes to crime (especially violent), it doesn’t take much to change your perception. 1 incident you’re personally involved in is usually 1 too many. Seeing near misses doesn’t help.

The economy is similar - unnecessary stuff is still accessible, but major necessities (food, housing) are worse than ever.

Trends are what influence perception - and rightly so. We’re the most technically advanced we’ve ever been and we’re regressing on the important things. Negative public reaction is (unfortunately) necessary to continue our overall positive trend.

>Many urban areas saw an increase in crime starting around 2020

AFAIK crime statistics do show a small uptick during the pandemic, but people thinking crime is on the rise predates that (ie. during the 2000s and 2010s, despite statistics showing otherwise).

Ime, it's doom and gloom for people in tech and other white collar industries, but people in other industries (especially skilled ones) have become fairly positive.

The loudest people on social media, especially forums like Reddit and HN, tend to skew towards people in the tech industry.

A lot of tech is probably colored by what was truly an exceptional decade or so in roughly the 2010s. Now, layoffs at larger tech companies are not an exceptional event, many companies have tightened up on expenses and hiring, and (even if not necessarily salaries) total compensation has probably taken a nosedive in many cases. (While housing prices are still very high in certain high profile areas.)

Yep. Even though I myself am in tech, my family background wasn't as affluent as other people in the industry.

As such, I feel a bit of Schadenfreude from people who lived with a golden spoon hyperventilating about what is by most standards a fairly normal tech market (or at least, used to be the norm before 2015-16)

I'd even say it's basically equivalent to the tech hiring market in ~2019 and 2018 when I was looking for jobs. Except offers are better (though no bidding wars like 2021)

I can see that. Idk when the unrealistic expectations started kicking off on HN and Reddit - maybe COVID?

But the market seems fairly normal scale of things outside of a couple large employers who tended to hire juniors at the expense of more experienced engineers (Google, Meta comes to mind, and some teams at Amazon), so this might be their first time in a market like this in their careers

Even tech is doing mostly fine. Layoff chatter is going to continue for Q1 but it'll settle down.

The real problem is that the haute precariat who work in the media are being battered by attention spans and ad blockers and ineffective paywalls and bad-news-burnout from the last few years. They're the ones that are most loudly dooming because they're mad that they are overwhelmingly children of the affluent who are doing worse than their parents. It's not like that for almost the entire rest of the country, but these people set the tone by setting the assumption. "Of course the economy is bad, my friend from Yale got laid off from her legal job at Google! Of course the economy is bad, my comedian friend from Choate has to move back in with their parents!" etc etc.

I feel a bit doom-and-gloomy, mainly because I'd like to move into a bigger house as my family grew over the past few years.

The problem being, I bought my current townhouse almost a decade ago and refinanced during the pandemic to an incredibly low rate. Since I would need a new mortgage to buy a new house and rates are significantly higher now, I feel like I'd end up paying twice as much per month for a marginally better house. I'd always heard that housing prices have an inverse relationship with interest rates, so if rates go up, actual housing prices should go down. In reality (so far), prices seem to be much stickier, and people just aren't listing many houses at all.

So essentially I'm whining that I'm paying a shockingly low amount of interest, almost borrowing money for free, and if I take out another loan I'll actually have to pay a (historically) normal amount of interest. But it would still really hurt to make that jump, and it does feel like weird/unhealthy stuff is going on in the housing market.

This is mildly amusing because I feel like I'm a great economy for effectively the same reason. I bought a downtown townhouse seven years ago at roughly half the price this neighborhood is currently going for and I'm paying 1.9% interest, on track to have the house paid off completely in another seven years despite housing expense being well under 10% of my income. I'm also expecting a kid but purchased bigger than I needed on purpose in anticipation of that.

I'm sure a lot of this has to do with who you know as well. Someone further down asked if it "feels" like unemployment is really 3.7%, which seems like a silly question in a lot of ways. How something feels to you is not representative of an entire country. Personally, it "feels" like 0% unemployment to me because nobody I keep in regular contact with is unemployed, my family is mostly in skilled trades and business is booming, and my younger nieces/nephews who recently graduated college all found jobs pretty much instantly, higher paying than I'd have expected, with random ass humanities degrees and no special skills. My own company is still growing and hiring, though our parent company had layoffs. I don't know any of those people, though.

But if your entire peer group is senior engineers expecting $500k salaries who worked for web companies that overhired during Covid and live in places where a family-sized house goes for at least $2 million, it probably feels more dire. Probably similar for media companies given the streaming wars are ending and they have to operate like real businesses now and actually make money. All the creatives I know have been struggling their entire lives, though, so that is nothing new.

You have a (smallish) subset of people in tech, many living in an area of the country which has tended to be more expensive--often much more expensive--than just about any metro other than NYC for decades, which came to regard totally compensation that was totally out of line with what engineers traditionally earned as normal. And presumably the flood of people who went into computer science and programming because that's obviously where the money was will tend to bring the market into equilibrium.

Why pay your house off early? I stopped a while back and save the money instead. My wife and I both “pay” the full mortgage each but we save the other half for investments at the moment.

We could pay off 80% of our house this year but I feel like it should just invest all the cash.

Any thoughts beside being free from a mortgage? I would love to live rent free but I’d make more investing it.

There's definitely psychology involved but it's mostly about the numbers.

I paid off my ~5% mortgage quite a few years ago when I had some spare cash. In retrospect, I would have been better putting it into an index fund, but who knows adjusting for risk?

Today, if I had a 1-2% mortgage, I'd be putting the money in my brokerage money market account. If I were buying today, I'd probably pay cash if I could.

I would not suggest paying off a mortgage at that interest rate. Keep enough cash on hand to ensure you can service the debt, but that rate is a gift, a unicorn likely never to be seen again. Ride it to maturity.

I've long felt like doom & gloom is somewhat key to a strong economy. By tempering that "irrational exuberance" that leads to the development of bubbles that eventually cause recessions.

To answer your question: yes, in the USA at least, consumer confidence in the economy was low through the early to mid 90s. The country had a recession in the early 90s with oil prices rising and real estate prices remained quite low throughout much of the decade.

The Consumer Confidence Index throughout the 90s maps almost exactly to the CCI from 2008-2020. With lows of about 60 in 1990 & 2009 to peaks of about 140 in 1998 and 2018.

Not sure about Europe though. But seeing as oil prices are global, I image y'all didn't much like the early 90s either.

Bubbles don't cause recessions.

However I agree that doom and gloom isn't necessarily bad. And I would also say that short sellers perform one of the most vital functions in finance. (And that's why we should encourage their activity, instead of curtailing them with ever more rules or casting them as the bad guys.)

> Not sure about Europe though. But seeing as oil prices are global, I image y'all didn't much like the early 90s either.

Depending on where you were in Europe at the time, you would have had much bigger fish to fry: the end of the Cold War and dissolution of the Communist Block. You would have to look at individual countries to judge the impact (eg just a quick look at real GDP per capita reveals vast differences between eg Germany, Poland and Russia during the 90s.

(I grew up in (East) Germany and was aware that Russia did really badly in the 1990s. So I was a bit surprised to see that Poland's GDP per capita was on an upward trajectory almost immediately. I naively assumed they also had a painfully long and protracted transition phase. But it looks like their 'shock therapy' might have worked.) See https://en.wikipedia.org/wiki/Balcerowicz_Plan

The vibes are definitely off, but mostly “things are good around here but they MUST be bad over there.”

The data continues to be pretty unambiguously strong.

I think the “vibes” being off is a factor of lower perceived upward social mobility, and simultaneously higher perceived downward mobility (in the future).

And it could be due to how easy it is to see and experience people who are better off than you, and “knowing” you will likely never get there, or that the rising tide will lift their boat higher than yours.

And it could also be due to changing demographics, which are obviously drastic, especially due to lower fertility rates. Everyone knows changes must be coming, but exactly what changes and in what capacity are unknown.

It feels pretty good to me, locally, but to the extent Americans don't feel that way, the months of reporting on nightmare inflation followed by months of reporting on the "100% certain impending recession" now followed by more scare pieces on grocery and fast food prices even as inflation rapidly declines hasn't helped.

I'm personally seeing grocery prices actually come back down to pre-pandemic levels for some items as stores and manufacturers realize they milked the "record inflation" story too much. There were some supply constraints, but once the "inflation" story took off, lots of places raised prices way too much, thinking they could just blame inflation. But when they do it so fast that even folks in the top 10% of income start becoming price-conscious and bargain hunting, they've gone too far.

I get the sense that many Americans feel like they are personally doing well, but are convinced that on average, Americans are not doing well. It’s hard to tell when many numbers are used to spin/promote an ideology or attract eyeballs with sensationalist viewpoint.

> It’s hard to tell when many numbers are used to spin/promote an ideology or attract eyeballs with sensationalist viewpoint.

Lies, damned lies, and statistics.

It's hard to find data about how your peers are doing. Anecdotally, I know a lot of tech employees who are out of work right now and/or have been out of work for 6-12 months. I know more tech workers than I ever have before in my life, that's obviously going to come with 20 years of experience, but I've never seen such a large share of them struggling to find income -- to the point that a small number of them are moving out of the industry against their wishes.

>a small number of them are moving out of the industry against their wishes

And a larger number of which did so in the wake of dot-bomb. At least the meme that you could walk out of a job by Friday, and have 3 offers by the end of the following week just wasn't/isn't the norm in any other skilled labor profession.

The university of Michigan sentiment survey has recently seen huge increases in positivity. Some of these metrics are still pretty low, but going up. http://www.sca.isr.umich.edu/

From my point of view, it's a booming economy for the top 10%-20%. The middle are mostly holding ground, but the bottom 10%-20% are in, or close to, a depression. Homelessness and food bank utilization are at a record high by some measures.

The data indicates the lowest quintile is gaining the most:

https://www.epi.org/publication/swa-wages-2022/

If anything, the middle and upper middle is experiencing decreased quality of life, for example not eating out as often, because the lowest wage workers in restaurants/hotels/farms/etc are seeing wage growth.

That report shows an income increase of 9% from 2019 to 2022. There was a 40% currency devaluation during this time that led to the doubling of rents in most places.

The article indicates that inflation is accounted for: "Even in the face of rising prices, low-wage workers have experienced historically fast real wage growth."

The people who gain are the ones willing to change jobs; which is primarily the top and bottom 10%. Those two demographics are the ones experiencing wage gains that have outplaced inflation. The middle class who feel loyalty to their employers (like me) are the ones who aren't getting raises in line with inflation.

I really don’t know what weird shit is going on there because all the indicators are looking great. Even in Europe the situation isn’t all that dire … even though notably Germany was much harder hit by the Ukraine war (cutting itself loose of its gas dependency on Russia afterwards) than e.g. the US.

It‘s just weird feelings based hyper cynical doom and gloom. I get that very recent inflation does feel like shit (if you actively remember paying substantially less for something just a couple months, years ago) but at some point that effect has to disappear, right? Especially given real wage growth in the US.

So, yeah, people in the US. Explain yourselves. And people in Europe, explain yourselves, too. (For Germany my hypothesis is horrid political communication by the governing parties. They are doing many of the right things and lots of great things are being implemented after years of standstill but they do not manage to communicate all of that competently.)

Yurop is getting kind of screwed over by a couple of wars on its periphery that are interrupting things like natural gas and shipping.

Europe also largely adopted the bullshit austerity policies that everyone screamed for Biden to adopt, and their economies are languishing for it.

I thought we were done with the "expansionary austerity" malarkey:

* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...

It's generally a bad idea:

* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...

Certainly all-spending, all-the time isn't what one necessarily should do, as an already working economy should be left to its own devices so that government spending and fiscal room is around as a form of 'dry powder' to have when the private sector (inevitably) has a downturn.

You don't need government spending and fiscal room 'dry powder':

Fiscal policy is a really bad lever to pull to get the economy out of a slump. It's very wasteful, and doesn't have much of an influence.

(For an example: do you remember the 'fiscal cliff' in 2013 or so? Because of some debt ceiling shenanigans the US federal government dropped spending by a lot, and virtually all pundits were predicting recession. See eg https://www.reuters.com/article/usa-fiscal-marketdeal-idCNL1... I can dig up more, if you need a reminder. It was all over the news.

The fiscal cliff came, and despite the fiscal austerity economic growth actually accelerated.)

If you have a competent central bank that's targeting inflation or nominal GDP, they will counteract whatever the fiscal side is doing. The Fed can add or remove money from the economy as they please, and thus bring total spending up or down.

The best thing: they can undo mistakes. If they inject too much money, they can subsequently remove that money by selling assets off their balance sheet. That's much easier than 'unspending' on the fiscal side, which is basically impossible.

No, because it's left-wing shibboleth to say everything is terrible and it's right-wing shibboleth to say everything is terrible when a Democrat is president.

But, this is slowly changing and sentiment has risen for the last few months.

Wage growth is a bit misleading without factoring out inflation.

In real terms: https://fred.stlouisfed.org/series/LES1252881600Q (Once you change the settings to YoY, the chart looks fairly unremarkable. Granted, it is only up to date to the end of last year.)

> Wage growth is a bit misleading without factoring out inflation.

The article literally mentions inflation right after, followed by what the real wage growth works out to.

>Wages are growing at more than 5%:

>insert chart here

>And inflation is around 3%:

>insert chart here

>So we’re talking 2% real wage growth and 6% nominal economic growth. [...]

I can see this being misleading if you used "Wages are growing at more than 5%" as the headline or something, but I don't think anyone is being misled unless they have the attention of a goldfish.

Yes, we read the same article. What I'm saying is misleading is the chart itself. The chart in the article supports a totally different conclusion than an inflation-adjusted chart. It doesn't actually support "Best economy since the 90s," and yet the author included it. That in itself is misleading to me, whether or not you hedge with a quick statement about inflation afterwards.

I'm not sure how you got the impression that the article claimed "Best economy since the 90s". The claim, made right after the remark about what real wages amount to is "The current environment looks more like the 1990s economy than the 1970s.". Looking at the inflation-adjusted wage chart, I'm inclined to agree. The pandemic screwed up the YoY numbers, but the past couple of quarters do look similar to the 90s.

> I'm not sure how you got the impression that the article claimed "Best economy since the 90s"

This is approximately what the blog post's headline is (from the parent poster to my original post).

When I look at the real wage YoY growth chart, the past quarters look similar to many, many periods in previous decades, not just the 90s.

It's not surprising that housing is the main exception: high interest rates make housing more expensive. Demand for housing is relatively fixed (roughly proportional to the number of people) so unlike most other goods higher interest rates don't affect demand as strongly.

Interest rates only affect purchasing, not renting, at least at first order. Is purchasing demand actually fixed? I'd expect people to substitute renting for buying - I certainly do.

Also note theoretically purchase prices would adjust lower with higher interest rates. However, market is highly distorted by existing holders of mortgages not being able to transfer their low interest rate mortgages to other properties or people.

High interest rates make house prices drop, until new mortgages are about as affordable as before.

(This might be easier to understand in the reverse: low interest rates make houses prices go up until the mortgage is just as (un-) affordable as before.)

> It's not surprising that housing is the main exception: high interest rates make housing more expensive.

Use the slider at the URL to see different years: this has been a growing trend, and not just a recent (1-2 year) phenomena.

All I know is that I am able to save less, because everything costs more especially food. I know that many of my peers who are looking for work or have been let go. I know that despite the rise in interest rates housing prices have stabilized but haven't dropped.

But who am I going to believe my own lying eyes or the honest upright and trustworthy government?

> But who am I going to believe my own lying eyes or the honest upright and trustworthy government?

Some people believe their own eyes and come to the conclusion that the Earth is flat. :)

Edit: Downvotes? Sheesh people, lighten up. :)

Despite all the economic dooming on social media, it actually looks like we might get a soft landing. And if so, Jerome Powell and the fed deserve a ton of praise.

The economic doomerism is basically chattering class bullshit

White collar jobs like tech have been negatively impacted, but most other industries have seen significant wage gains [0]

All this "woe is I" layoff bullshit when millions of non-Techies might have been left on the streets when Covid hit, while we were happily working remotely and purchasing stocks or property.

[0] - https://www.atlantafed.org/chcs/wage-growth-tracker

>The economic doomerism is basically chattering class bullshit

I'm skeptical that you go from the lowest rates in history, over the longest period in history, to the fastest hikes in history...without some serious economic repercussions.

>significant wage gains.

Consumed by inflation, for the most part (but at least we kept pace). The average person isn't wealthier.

Average Wages have been growing faster than inflation. [0]

You don't feel it in SF/NYC/Boston/Seattle but that's also due to industry skew, and you absolutely feel the economic change in cities like ATL, Phoenix, Columbus, etc

In the tier 1 cities I mentioned, wages are growing much slower than the cost of living, but that isn't true for the rest of the country anymore.

[0] - https://www.statista.com/statistics/1351276/wage-growth-vs-i...

Last years inflation was 10% in my country. I only got 3% raise because having higher raise would "increase inflation". I'm still able to afford my lifestyle but I don't have the same from 4 years ago.

Which country is that? And who made that excuse that you quoted about inflation? That sounds like something that would be very weird for a private employer to say; so I assume you might be in the public sector, or something with very highly regulated wages?

> I only got 3% raise because having higher raise would "increase inflation".

You only got 3% because you were not able or willing to find a buyer to give you more than 3%. Any other reason is just the buyer being polite.

Obviously, this works both ways too.

> Last years inflation was 10% in my country

This is a conversation about America, not your country.

The fed was created to prevent the boom bust cycles we’ve seen for the past 100 years. I don’t think “making it hurt less” when your entire purpose is to avoid the pain is praiseworthy.

But who’s to say - maybe the rains do actually keep coming because we make all those sacrifices to the gods.

The creation of the Fed was a complicated process with lots of political horse trading.

And until at least the 1980s the Fed did worse than the (broken!) system that they replaced.

See https://www.cato.org/policy-report/november/december-2012/ha... about the Fed.

On the positive side, Canada would have been an excellent role model to emulate, instead of coming up with the Fed system: https://www.cato.org/blog/there-was-no-place-canada

They deserve praise because their job is incredibly difficult. Just because its what theyre supposed to do doesnt mean its easy. I give praise to my coworkers when they do a good job, and our work is way easier than the feds.

Wall Street is going to wake up pretty soon and realize that strong economic numbers means no rate cuts. And eventually the rate cuts are going to bite into loans which are hitting their maturity dates and rolling over.

OK but we had this for basically all of last year as inflation moderated and jobs kept growing until suddenly good news meant good news to the market.

$SPX is at an all time high right now at $494. That's insane. I bought in at ~$360 in 2022.

Good, but now you should probably be considering when to exit that trade and book your profits.

Why? Don't try to time the market, especially if you are a passive index investor. (If you do believe in active investing, why are you investing in the S&P500?)

Just buy when you have money, and liquidate your investment when you need money.

Could only do it because of structural demographics (excess COVID deaths + retirements + ~3.6M Boomers retiring per year). Note shortages across various industries (teachers, bus drivers, healthcare workers, air traffic controllers, etc). New York City walked back its remote and flexible work policy due to hemorrhaging talent. The Federal government is holding onto a substantial cohort of workers because of its telework allowances (because those folks could simply retire instead).

Citations:

https://www.clevelandfed.org/publications/cleveland-fed-dist...

https://thehill.com/opinion/technology/4405350-telework-is-a...

https://www.nbcnewyork.com/news/local/nyc-remote-work-eric-a...

https://www.axios.com/2023/08/27/labor-shortages-air-traffic...

https://seekingalpha.com/article/4531829-older-workers-propp... | https://archive.ph/sKeyE

https://www.marketplace.org/2022/01/24/how-much-labor-force-...

https://www.axios.com/2023/05/08/us-labor-shortage-older-wor...

https://www.businessinsider.com/baby-boomer-retirement-surge...

https://www.cnbc.com/2023/08/21/american-workers-are-demandi...

Yeah, we also only have structural disruptions in the first place because of the global pandemic.

All of the factors you've mention are in play in peer economies are managing things less well.

Bunch of my friends have gotten seconds jobs doing wfh govt jobs. Problem isn't labor shortages, problem is bullshit jobs. Some even have three jobs.

We would have enough bus drivers and train operators if we eliminated all bullshit white collar jobs.

If the job is going unfilled, it isn't paying enough (either for conditions or to meet worker needs at some level), simple as that. There is a market clearing price, and unemployment is not at 0.

900+ US school districts have moved to a four day week to retain teachers [1] [2], for example, because they have no other choice.

[1] https://www.cbsnews.com/news/school-districts-4-day-week-tea...

[2] https://www.npr.org/2023/11/08/1211632901/schools-across-the...

>If the job is going unfilled, it isn't paying enough (either for conditions or to meet worker needs at some level), simple as that.

For an individual Role, yes. for an economy, no, because you run into supply limitations.

But anyways, that isnt the question. The question is which jobs add value and how to structure an organization so that it is efficient and effective.

If your organization is crappy enough, you might not be able to get net value out of roles, even if you fill them.

>900+ US school districts have moved to a four day week to retain teachers [1] [2], for example, because they have no other choice.

From what I have seen in California Schools, there is more than enough money for teacher salary, but the grift and organization is the problem. State funding is ~ 23k per student, you have 30 students per class, or $700k/class. The average salary of public school teachers in 2021–22 for the State of California was $88,508.

Bullshit jobs and productive jobs that do not pay enough to outbid bullshit jobs is the same problem - misallocation of resources.

The market is allocating; to allocate more efficiently, move towards central planning where you can allocate more intelligently. Otherwise, this is the economy you've got.

Big fan of Graeber, agree there's lots of bullshit jobs.

> move towards central planning where you can allocate more intelligently

My understanding is that there's a lot of historical evidence to suggest that central planning would do the opposite of better allocating resources. Besides, with US government spending at around a third of the GDP[0] now, plenty of that is going on, already.

[0]: https://www.imf.org/external/datamapper/exp@FPP

Are you suggesting the government does not have bullshit jobs? Surely there are bullshit white collar government jobs while at the same time the government is not paying teachers and bus drivers enough.

No, bullshit jobs are everywhere (gov, private industry, etc). I'm suggesting that the metrics we have currently to evaluate if a job is bullshit or not are insufficient to capture the true value of a job and its outcomes, leading to the inefficiencies of bullshit jobs.

Central planning is likely the wrong phrase, I just don't have something better cooked up at the moment to describe, "Should this job really exist? Is it creating value in some way? Or is it just existing for some other suboptimal purpose?" Clearly, the market itself is not allocating efficiently if bullshit jobs exist in such great number. What is the solution? I don't know.

> Some even have three jobs.

Sounds like the problem is that people need three jobs to be comfortable.

“Comfortable” is far too nebulous of a metric to be useful in this discussion. How do you know they don’t have 3 jobs to afford an unnecessarily large/extravagant/showoff vehicle/house/etc? How do you define unnecessary?

who says they weren't comfortable?

if by comfortable you mean owning 4 rental properties then yes.

The second comment is deleted.

Specifically, in what direction did New York roll back the policy?

EDIT: Citations revamped to point directly to sources instead of my previous comments containing them.

https://www.nbcnewyork.com/news/local/nyc-remote-work-eric-a...

> Gov. Kathy Hochul said it has been a longer transition back to office work than anyone expected, as she too had predicted (if not demanded) a more robust return to work schedule. But now it sounds like she is opening up to the idea, whether she likes it or not.

> "I think the mayor is simply acknowledging the reality. We have a shortage of workers especially in government," Hochul said, adding that a more robust office pattern could still arrive down the line. "I believe all this is transitional, it does not have to be the death sentence in five days a week ever again, but we are not quite there yet."

Why do people need to return to the office? I have Teams, Zoom, email, Slack, and a cellphone. I also don't have an hour commute each way. I've gotten more done "at work" at home than I ever did in the office. Meetings are now as long as they need to be, not the full 1-2 hours scheduled whether we need it or not. While the opportunities for chit-chat and out-of-band conversations are not as spontaneous, using all the tools we have for communications can be just as impactful for one's mental health.

Just gotta give people a few more years to become more comfortable and effective at home and to be better supported by tools/infra/culture for remote work… then they’ll be ready to come back.

1.8M people over the age of 55 die every year in the US, half of which are in the labor force. Progress is inevitable as these workers age out, and younger workers take their place.

This might prevent a recession, but it will continue to fuel inflation.

Inflation has been falling for a while. It's down to 3.4% -- higher than the 2% target, but well below the peak. The Fed is even considering cutting interest rates, which says that they think that inflation is under control.

The recent bout of inflation is less about monetary policy than about the supply side, especially things like COVID and Ukraine causing supply disruptions. Those things have levelled out and begun to decrease.

Housing costs haven't dropped enough IMO to declare a win.

I think its become clear that its a government problem, because if it was just a market problem, supply / demand would have leveled out by now.

Why would it have leveled out? Just article of faith about The Market?

Go talk to a builder. Land is ridiculously expensive due to speculation and labor is impossible to find due to it being a generally shitty job.

> Housing costs haven't dropped enough IMO to declare a win.

This is a fundamental misunderstanding about inflation. If inflation goes to 0%, housing costs will stay exactly where they are now. You are looking for a deflation in housing costs, where inflation is < 0%. We had that in 2008 and it caused...collateral damage.

The only real way to lower housing prices is to build a lot more housing. So yes, it's a government problem in that we don't let private actors build housing to meet the market's demand.

It’s a supply and demand problem, but it’ll take years to play out. Too many people are locked into 30-year mortgages with 26-28 years left at 2-3% interest. They’ll basically never sell (barring a major issue like having to move for a job after layoff or a divorce). So the supply of housing is much lower than normal all across the country. In some areas new construction can pick up some of that slack, but new construction is just getting into swing after a huge drop early in the pandemic.

Why would the market have leveled out by now?

It takes years to build any substantial housing.

> The recent bout of inflation is less about monetary policy than about the supply side

The fiscal side[0] is probably more to blame than the supply-chain restrictions. Aggregate demand was kept turbocharged since Covid through deficit spending. And given that the CPI is still 19.1% higher as of last reading compared to pre-pandemic times, whether or not the rate of change is falling, people are still rightly feeling squeezed.

[0]: https://fred.stlouisfed.org/series/FYFSD

The fed is considering dropping interest rates because the commercial real estate market is absolutely effed if they don't and they "need" to protect banks and the wealthy.

WSJ article on the pending "Doom Loop" https://archive.is/MOzr9

>The Fed is even considering cutting interest rates

What does this even mean, practically speaking? Their entire purpose is to always be considering lowering, maintaining or raising rates.

The current policy management has conclusively disproved that you must sacrifice employment to reduce inflation.

I know nothing about this stuff. Aren't they combating inflation with higher interest rates? Is it out of their control?

When you consider the politics of the doomers, its far worse than that. The economic-doomers want the Fed to lower rates to "save jobs". Because lower-rates tends to lower unemployment.

The Fed is ignoring them and keeping rates high, because the economic-doomers are wrong.

------------

So economic doomers complain about inflation (which the Fed is trying to fix with high rates), but also want to pretend that unemployment is secretly 10x worse than it really is for some reason.

The Fed is talking about lowering rates, because everybody is thirsty for the punch bowl. They want to be responsible, but it's sooo tempting.

Personally I believe they kept rates far too low for far too long last time, deceived by the way the free money inflated assets rather than consumer prices, and that's a big part of what caused the recent inflation spike.

Everyone I know that is an economic doomer is much more worried about inflation than they are about unemployment.

High rates favor labor money, low rates favor capital money. Low rates also improve job creation, so sometimes labor is divided.

Several rate cuts are expected this year. Based on Jerome Powell's speech yesterday, March cuts are unlikely, today's data would confirm that. Rate cuts likely beginning over summer depending on the data over the next few months.

It's 100% out of their control.

A shrinking workforce and demographic pyramid collapse will fuel inflation well enough.

Also notable:

> The change in total nonfarm payroll employment for November was revised up by 9,000, from +173,000 to +182,000, and the change for December was revised up by 117,000, from +216,000 to +333,000. With these revisions, employment in November and December combined is 126,000 higher than previously reported.

Partly driven by an update to seasonal factors and annual benchmarking.

Yeah wait for revisions. There’s been some multi-sigma shenanigans at first print in the recent past

These numbers include upward revisions for past months.

You make a good point about these types of numbers. It's hard to get accurate and timely data in the field of economics, and headlines will never show the revisions, so the information we see will usually be the least accurate (assuming accuracy grows with time).

That said, these are good numbers and there's no reason to suspect they're not real.

Numbers include part time positions, we’ve had a decrease of full time positions which I feel is misleading.

Also accounting for multiple part time jobs vs a full time job

Estimates for November and December were also revised up, by a combined 126,000 jobs.

I feel like I've never heard so much about multi-sigma job beats than I did last year. At what point do we say that something weird is going on?

For those who're wondering what the sigma beat was this time, it was a 4-sigma beat, which is pretty large.

Does the deficit increase[1] play a role in the very good economic numbers seen lately?

[1]https://www.brookings.edu/articles/why-did-the-budget-defici...

> While #GDP surprised to the upside in Q4, it wasn't a healthy expansion. To garner a $329 billion increase in economic growth it required a $834 billion increase in debt. Or rather $2.53 for each $1 of economic growth.

https://twitter.com/LanceRoberts/status/1751930127519203459

Federal spending is fifth in causes of real GDP growth:

* https://www.bea.gov/news/blog/2024-01-25/gross-domestic-prod...

Behind consumer spending, exports, state/local governments, business investment.

Certainly the two stimulus packages helped early on, but things seem to be chugging along without that.

That article ends with a segment titled "bottom line" that states:

> The recent increase in the deficit doesn’t fundamentally change the fiscal outlook for the U.S.

Great example of Betteridge's law of headlines.

https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...

Hard to imagine that what's basically $2 trillion in annual stimulus has no effect on the economy.

Possibly, but not as much as Bidenomics' trillions of investments into American jobs, infrastructure, and manufacturing through the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act.

The Fed is also signaling very clearly to the market the cost of money. This, combined with frowing understanding of LLM-driven efficiencies, are letting businesses feel comfortable with investing in revenue returning initiatives.

And more revenue usually means more jobs

Employment has not (edit: recently) been the problem.

The problem is that food prices are insanely high, home prices are insanely high, rent is insanely high, etc. Incomes haven't kept up with inflation, especially asset price inflation, and economic inequality is as bad as it has ever been.

And this situation developed while unemployment rates were generally low (except during the pandemic). I think we're focusing on the wrong measures.

Food and rent prices are definitely out of control, but wage growth actually outpaced inflation [1]. Whether wages outpaced real cost of living including local rents, I have my doubts given the widely reported fact that half of Americans can now not afford their rent using the standard 30% rule [2].

[1] https://www.americanprogress.org/article/workers-paychecks-a...

[2] https://www.cnn.com/2024/01/30/economy/rent-prices-dropping-...

Your first source doesn't really support its own headline. "Workers’ Paychecks Are Growing More Quickly Than Prices" becomes "most workers" in the subhead, then "57 percent" in the text.

> 57 percent earned higher annual inflation-adjusted wages than the year before

Which means 43 percent did not, which isn't that good.

And the housing situation in particular is worse, when you consider that that year-over-year CPI increase was 3.1%, but "S&P Dow Jones Indices’ CoreLogic Case-Shiller national home price index rose 5.1%"[1] over the same time. IOW, most workers' wages have fallen relative to home prices.

> Young adult workers ... have seen their real median wage rise 12 percent since the onset of the pandemic

The CPI since early 2020 has risen about 20%, so those wages, before adjustment, must have risen about 35%. But "U.S. home prices are now up 45% since March 2020, the early days of the pandemic."[1]

1: https://www.msn.com/en-us/money/realestate/us-home-prices-ar...

> wage growth actually outpaced inflation

Other sources paint a different picture; real median personal income is flat[0] (really, within $60 a year), and real median household income is lower[1], compared to pre-pandemic.

[0]: https://fred.stlouisfed.org/series/MEPAINUSA672N

[1]: https://fred.stlouisfed.org/series/MEHOINUSA672N

That looks at the income of all households. Boomers are retiring in droves, which drags the median down, and makes the number unrepresentative.

Let’s tackle each of the issues you mentioned.

Food prices, rent - true they are high, but there is hope. Average hourly earnings are growing faster than inflation since early 2023.

Home prices - these will fall when interest rates fall, which can only happen when the Fed sees inflation fall a bit more. While employment is high and inflation moderate (like it is now), the Fed is reluctant to cut rates.

Incomes and inflation - didn’t keep pace in 2021 and 2022, but they did in 2023.

Economic inequality - reduced in the last few years, mainly because lower wage workers have seen bigger raises than high wage ones.

This means that we are discussing the right metrics (employment, growth, inflation), because the one you care about are downstream of these. And the right metrics have looked good for about a year.

> Home prices - these will fall when interest rates fall

This is the opposite of what will happen. Homebuyers express their housing budget in the amount they can spend each month. That then translates to a home price. If rates come down, that budget translates to a higher home price. (All things equal, if a buyer has already decided to spend $X, they are not going to spend 0.8 * $X to get a lesser place just because rates have come down.)

When rates come down, houses are going to get still more expensive.

In the short term that's absolutely correct. In the medium term higher home prices and lower interest rates encourage more building. Assuming that NIMBYs don't prevent that construction (big if), that would lead to lower home prices.

But high interest rates isn't making things affordable because first time buyers can't afford a mortgage at those rates.

>Home prices - these will fall when interest rates fall, which can only happen when the Fed sees inflation fall a bit more.

Please explain the mechanism by which lower payments on bigger loans will reduce home prices.

Will home prices ever come down without additional housing supply? If salaries are doubled, rent will also double because that much people will pay as they must live somewhere. Housing is essential; if supply is less than demand, no fiscal policy can help.

> if supply is less than demand, no fiscal policy can help

Fiscal policy means government taxation and spending - subsidies for home building would be a fiscal policy and would help.

I think you mean no monetary policy can help.

Even there I disagree. Easy money mostly flowed into the hands of the wealthy, who then bought homes as investments, driving up home prices to the point that average people couldn't afford to buy them to live in.

Or people decide that core coastal metros aren't all they're cracked up to be or that they're willing to compromise on climate/other factors for much cheaper housing prices. There's no real shortage of housing--just housing that is in areas a fair number of people prefer given the choice.

Fiscal policy can help slow growth, but prices will always go up in high demand markets.

Unemployment was the problem in 2008.

>I think we're focusing on the wrong measures.

I know we are and obviously it's intentional.

I'm glad we're seemingly out of the "good news is bad news" territory, where over-performing employment numbers kept driving investors to worry that the fed would further raise rates.

I wouldn't say we're in "good news is good news" territory--SPY is basically flat for the moment--but it's much better than when a great jobs report would start a panic of SELL SELL SELL!

Is there any sort of metric that describes how many people are making ends meet by some definition?

Yes. https://www.census.gov/topics/income-poverty/poverty/guidanc...

(More than one. Throw in things like CPI.)

Assuming there are no big revisions, this means its less likely that the federal reserve will lower interest rates. If anything, they may consider increasing interest rates.

Whatever cold the US caught or thought it could catch, the UK still seems to be suffering the flu.

UK stocks seem so unloved at the moment, and oft led by US sentiment.

The US has, from a policy perspective, become far more protectionist in the past 7 years and this is only looking to continue. I would not expect a direct correlation between the US and European economies going forward and if the protectionism only gets worst I would expect the economies, GDPs and the like, to greatly diverge in favor of the US.

> UK stocks seem so unloved at the moment, and oft led by US sentiment.

I'm going to go ahead and blame the choices made by your brethren and politicians for this one.

A bunch of of analysts said brexit was going to be bad for the UK economy in a number of specific ways. The population didn't listen, and no leaders stepped in to save the day. You can't really blame investors for treating your country like a toxic waste dump when they openly accept toxic waste and leaders are out there pushing the idea that toxic waste will bring in more money and isn't really toxic.

It isn’t just Britain. Europe as a whole has performed poorly in contrast to the US. The rest of your post is politically partisan rhetoric and not useful for real analysis.

The tradeoff for brexit was increased political autonomy at the expense of trade relations. When companies said they'd reduce investment if brexit went through, they weren't lying. Investors hate uncertainty. It's not politics to point that out.

The issue with energy/food prices and mainland Europe is a separate issue that is also impacting UK. But lack of investment is so obviously tied to brexit that the only partisans are the people claiming it's not related.

Anyone else feel like way more than 3.7% of the people they see are unemployed and looking for jobs? Or is it just me? Am I missing something?

Not unemployed but I know plenty who are under employed or looking for new jobs and it seems hard to find one across industries (medical, HR and tech.) Doesn’t read like your typical market with <4% unemployment. I’m sure we are at that, but the types of employment and market conditions aren’t great and people are taking anything they can get, sometimes multiple jobs, just to stay afloat.

Tech is the worst job sector right now. Everyone I know not in tech is doing quite well.

Tech has been an outlier of late, in terms of layoffs.

Election year statistics.

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