Previewing the US non-farm payrolls unemployment

It’s that time of month where traders gather round their screens to see what the full picture of US unemployment, and hence the direction the Federal Reserve will take in the following month with regards to monetary policy.

2022 is already going to be a bumpy ride with the release of the December minutes from the last Fed meeting, implying a much more hawkish Fed ready to tackle an extremely tight labour market and burgeoning inflationary pressures. Tonight’s print could be the solid black line under those minutes.

Last night’s initial weekly jobless claims numbers however gave a little pause to the “tightness” with an unexpected rise in claims. From CNBC:

Initial claims for unemployment insurance rose a bit more than expected as the omicron variant spread rapidly through the U.S., the Labor Department reported Thursday.

Jobless claims totaled 207,000 for the week ended Jan. 1, higher than the 195,000 forecast and up 7,000 from the previous period.

The above chart shows its all relative though, with the market tightening all through 2021. More structurally interesting was the latest release of population figures for the USA which showed growth stalling to the lowest rate on record because of COVID:

The population grew by just 0.1% in 2021 — measured from July 2020 to July 2021 — which is the slowest growth rate on record since 1900, according to an analysis released by Wells Fargo economists on Wednesday based on US Census data.

For comparison, population growth during the Influenza Pandemic and the First World War hovered just below 0.5% — rising slightly during the Great Depression to around 0.6%, according to the data.

The economists pinned the current growth slowdown on increased mortality rates, decreased birth rates, and less international migration during the COVID-19 pandemic.

“The period from 2010 to 2020 marked the second-slowest decade in history for U.S. population growth,” Wells Fargo economists Mark Vitner, Charlie Dougherty, and Nicole Cervi wrote in their analysis.

And with the Baby Boomers retiring (or dying off quicker than normal in Red States – 52% more likely to die from COVID if a Trump voter) there are even more labour shortages coming down the line. A former boss of McDonald’s hit it on the head with an analogy that is equally relevant here in Australia, where a lot of imminent retirees have vast wealth locked up in real estate and are also looking to retire early.

From MSN:

Ed Rensi, who served as the fast-food chain’s CEO until 1997, said during an interview with Fox News Tuesday that the volume of people starting to retire has been overlooked in the conversation about labor challenges nationwide.

“The retirement numbers are going to start to accelerate and there’s going to be a lot of upward mobility because they’re leaving the workforce, which is going to leave a shortage at the bottom end,” Rensi said. “And boy, we’re feeling it big time at restaurants, barber shops, daycare centers. It’s a nightmare.”

Rensi’s warning comes amid a rising trend of early retirement in the US. A July survey of about 1,300 American household heads conducted by the Federal Reserve Bank of New York found that nearly half of Americans expect to retire before turning 62. At the same time, the number of Americans who expect to keep working after they turn 67 fell to a record low of 32.4%.

October estimates from JPMorgan Private Bank  showed that 7.5 million workers are “missing” from the US workforce. While JPMorgan found that 36% of those workers are unemployed Americans, the next largest category is retirees: 20%, or approximately 1.5 million people, opted to retire early amid the pandemic.

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