{"id":1578,"date":"2019-08-02T12:06:11","date_gmt":"2019-08-02T16:06:11","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1578"},"modified":"2019-08-02T12:06:11","modified_gmt":"2019-08-02T16:06:11","slug":"july-employment-report-consumer-expectations-and-june-trade-deficit","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1578","title":{"rendered":"July Employment Report, Consumer Expectations and June Trade Deficit"},"content":{"rendered":"\n

KEY DATA:<\/strong> Payrolls: +164,000;\nRevisions: -41,000; Private: 148,000; Unemployment Rate: 3.7% (Unchanged);\nwages: +0.3%\/ Confidence: +0.2 point\/ Deficit: down $0.2 billion<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cJob growth is right where it was expected to\nbe and with confidence remaining high, the only concern remains trade wars,\nwhich look to be heating up again.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong> The\nnormally highly anticipated jobs reported was released today and it came in\nalmost at the exact number that forecasters anticipated.  In July, a moderate number or workers were\nadded to the payrolls.<\/em><\/strong>  Clearly,\nthat means it is a wrong number (drum roll). Actually, it is pretty much where\njob gains for this entire year were predicted. In other words, this was a ho\nhum number.  But there were reductions in the reported\ngains for May and June\u2019s big rise turned out to be good not great.<\/em><\/strong> The three-month\naverage is now below expectations.  As\nfor the report, manufacturing job increases were surprisingly good.  The problem is that the retail sector just\nkeeps contracting and given the structural changes in the sector, that should\ncontinue. <\/em><\/strong> Unfortunately, warehousing and\ntransportation are not picking up the slack.<\/em><\/strong> With firms not hiring few\ntemporary help, we should not expect a sudden surge in hiring. As\nfor the unemployment rate, it was stable. \nThe labor force rose solidly but as is usually the case, a lot of those\nentrants had trouble finding positions right away.<\/em><\/strong>   The\nparticipation rate edged up but it has remained in a pretty narrow range this\nyear.  Finally, wages were up decently but not\nstrongly.  However, hours worked declined\nand that does not bode well for overall income gains.<\/em><\/strong>  If incomes don\u2019t keep rising solidly,\nconsumption will have to moderate and that has been the sector shouldering the\nburden of growth.<\/p>\n\n\n\n

As for the consumer, confidence remains in good\nshape.  The University of Michigan\u2019s\nConsumer Expectations Index edged up in July.<\/em><\/strong>  The current conditions component eased but a\nrise in expectations overcame that decline. \nExcept for a steep drop early this year, the index has been in a fairly\ntight range for the past sixteen month. \nThat is good since the level is solid.<\/p>\n\n\n\n

The trade deficit narrowed just a touch in June,\nwhich should be good news.  But both\nimports and exports were down fairly significantly and that is not a sign of\neither strong domestic or international demand. \n<\/em><\/strong>Despite\nthe President\u2019s claims, farm exports, led by sales of soybeans, were up both\nmonthly and for the year.  As one of my\nclosest friends likes to say, \u201cnever let facts get in the way of bad\npolicy\u201d.  The biggest issues were sharp\ndrops in vehicle, gem diamond and computer sales.<\/em><\/strong>  Energy didn\u2019t play a large role in this\nreport.  The petroleum deficit, though,\nwas the lowest in memory.  That could\neasily turn next month, widening the deficit. \n<\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  Just\na day after Fed Chair Powell talked about trade issues moving from boil to\nsimmer, the heat got turned up again.  <\/em><\/strong>Nice\ncall Jay.  Okay, it is unfair to knock\nthe Fed Chair on a decision that was not expected at this exact time, though it\nwas somewhat telegraphed.  The President\ncomplained that the Chinese were not buying our farm goods as promised, which\nfor him is a political problem.  Of\ncourse it is an economic one as well, but the two have become one with this\nadministration.  The result is that fundamental\neconomic data that are not outliers are probably trees falling in a forest\nbefore measuring devices were invented. <\/em><\/strong> When the tweet about more Chinese tariffs\ncame out, the markets tanked and it looks like we are in for a long period of\nbattles.<\/em><\/strong>  Ten percent is just the\nopening gambit.  Twenty-five percent is\nthe next likely threat.  Ultimately,\nthose tariffs\/taxes on consumer of business goods will have to be passed on.<\/em><\/strong>  How would the Fed react?  Normally, I would argue that the Fed would\nsee through the economic slowdown and any potential rise in prices caused by\ntariffs as being temporary.  But this is\nthe Powell Fed<\/em><\/strong> and any one month of data matter, though which numbers\nand which month are unclear.  So,\nbuckle up.  We have a volatile president\nand an unanchored Fed and what that means for the economy is anyone\u2019s\nguess.  My new motto: \u201cYou tell me and we\nboth know\u201d.  <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Payrolls: +164,000; Revisions: -41,000; Private: 148,000; Unemployment Rate: 3.7% (Unchanged); wages: +0.3%\/ Confidence: +0.2 point\/ Deficit: down $0.2 billion IN A NUTSHELL:  \u201cJob growth is right where it was expected to be and with confidence remaining high, the only concern remains trade wars, which look to be heating up again.\u201d WHAT IT MEANS: … Continue reading July Employment Report, Consumer Expectations and June Trade Deficit<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1578","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1578","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1578"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1578\/revisions"}],"predecessor-version":[{"id":1579,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1578\/revisions\/1579"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}