Falling Off A Cliff



The latest Employment Situations report from the Bureau of Labor Statistics (BLS) on Friday, March 8, 2019, suggested the economy is in the midst of a massive cooling down. The United States economy added a mere 20,000 jobs versus the 181,000 that economists were expecting.  [i] [ii]


non-farm payrolls.JPG


If this report is the beginning of a new trend, we could easily slip into a recession later this year.  The good news is many economists are laying blame for this dismal jobs number at the feet of bad weather.  Goldman Sachs also stated that above-average snowfall in mid-February, when the BLS was conducting its survey for the upcoming report, was set to reduce total employment by at least 40,000 jobs. [i]

Seasonality being what it is, the average number of jobs created over the past twelve months has been 218,000 per month.  To say the least, this is a robust number that is far from recessionary.  [iii]


Monthly jobs created ttm.JPG


In my opinion, if American workers were truly concerned, you would expect a retrenchment in credit-driven consumption. But in fact, just the opposite has occurred.  In the most recent BLS report from January 2019, consumers added $17 billion in credit, of which 85 percent was in the non-revolving segment. [iv] [v] [vi]


revolving and nonrevolving credit.JPG


In fact, going back to 2017, this is one of the healthiest gains we’ve seen in credit.  Credit additions reached above the trailing two-year average by $1.5 billion [iv]


Consumer Credit Additions.JPG


Add to this, the recent data on wage growth.  Wages grew at a year-over-year basis of 3.4 percent, and according to Moody’s analytics, this is the strongest growth we’ve seen in the current business cycle. [iii] [vii]


Wage growth.JPG


With all that said, before investors follow any data off a cliff, it’s critical to assess the trends in jobs and wages that are driving consumption in our economy.

If you have questions or comments, please let us know.  You can contact us via Twitter and Facebook, or you can e-mail Tim directly.  For additional information, please visit our website.

Tim Phillips, CEO, Phillips & Company

Robert Dinelli, Investment Analyst, Phillips & Company



i.       https://www.usatoday.com/story/money/2019/03/08/jobs-report-just-20-000-added-february-economists-expected-181-000/3098383002/
ii.      https://www.axios.com/end-jobs-party-e704aa34-6c3b-4600-9db0-50911515c432.html
iii.     https://bit.ly/2TOrxsp (Subscription Required)
iv.     https://www.economy.com/dismal/indicators/releases/usa_credit/United-States-Consumer-Credit-G19 (Subscription Required)
v.      https://fred.stlouisfed.org/series/REVOLSL#0
vi.     https://fred.stlouisfed.org/series/NONREVSL
vii.    https://fred.stlouisfed.org/series/CES0500000003