September Job Openings, Hiring and Quits

KEY DATA: Openings: -284,000; Hires: -162,000; Quits: -47,000

IN A NUTSHELL: “Despite some weakness in the labor market numbers, there is really no indication that conditions are softening.”

WHAT IT MEANS: It’s Election Day so get out there and vote. I did and the turnout was heavy, despite rainy conditions.

Meanwhile, out of the political world and back into the real world, the so-called JOLTS report, which stands for job openings, layoffs and terminations, came in a little soft. Of course, this is the September release and we know that the hurricane didn’t help job gains. That said, while the number of openings fell sharply, it remained near record high levels. Don’t be surprised if there is a rebound in October that sets a new record. But the section of the report I watch most closely is the quits data. A truly robust market would have people freely moving from job to another. The number of quits is close to record levels and the rate of quits, which is the number of quits as a percent of total employment, is almost at a record high. The only time it was higher was at the end of the era. I would like to see the rate rise even further, and expect that it would, but I suspect with labor being in such massive shortage, firms are doing all they can to keep workers from walking away.

MARKETS AND FED POLICY IMPLICATIONS: While the JOLTS report usually is watched carefully, it will likely be the tree falling in the forest. Few will pay any attention to it. What we will be spending most of our time thinking about is the impact of the election. There are differing views all around. Unless the Republicans retain the House and the Senate, not much change will likely happen. Even if the Democrats take control of both, it is unlikely they will be able to override a Trump veto. And it just may not be bad to have gridlock for a couple of years. The partisan anger created by jamming through bills supported by mostly one party needs to be quieted. But a Democratic victory in even one house will create a dynamic that will likely lead to all politics all the time. The Republicans created the playbook when they voted several million times to repeal the ACA without any alternative, knowing that either the Democrats in the Senate would kill it or Obama would veto it. Similarly, the Democrats will likely vote several million times to repeal some of the upper income and business tax breaks. It is highly unlikely any bill will become law. Just as the Republicans were playing to their faithful and trying to broaden their support, so will the Democrats be trying to build good will with the voting public. Will they be successful in persuading the electorate that the tax cuts were bad? That is to be seen. But we need to see the outcome of the election first.