Tuesday , January 21 2020
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All Aboard the “No Recession” Train

Summary:
Hiring bounced back in November. More are hopping on the "No Recession" Train. I'm not one of them. No Recession in Sight Here's a Tweet that caught my eye today. This post on Change in Nonfarm Payrolls and Average Payrolls Change in U.S. Economic Cycle represents the entirety of the analysis. These two lines are the entirety of the article (emphasis mine). Nonfarm payrolls have averaged 184k the past 12 months, more than the cycle average of 170k. This does not happen in front of recessions. Image: LPL Financial LLC Really? Where's the Proof? Heck, where is the supporting evidence? How about some recession bars? How about any semblance of analysis to back up the claim? It's not even clear what the author means by "cycle average". All Employees vs Employment Level Lagging

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Hiring bounced back in November. More are hopping on the "No Recession" Train. I'm not one of them.

No Recession in Sight

Here's a Tweet that caught my eye today.

This post on Change in Nonfarm Payrolls and Average Payrolls Change in U.S. Economic Cycle represents the entirety of the analysis.

These two lines are the entirety of the article (emphasis mine).

Nonfarm payrolls have averaged 184k the past 12 months, more than the cycle average of 170k. This does not happen in front of recessions.

Image: LPL Financial LLC

Really?

Where's the Proof? Heck, where is the supporting evidence?

How about some recession bars?

How about any semblance of analysis to back up the claim?

It's not even clear what the author means by "cycle average".

All Employees vs Employment Level

Lagging Indicators

All Employees is from the establishment survey.

The Employment Level is from the household survey.

Both say the same thing: Employment is a very lagging indicator that peaks just ahead of recessions.

November Bounce

OK November bounced. Why?

The GM strike ended and there were additional seasonal factors as discussed in Jobs Surge in Strike-Ending and Seasonal Adjustment Rebound.

Manufacturing Blowout?

I dove further into the details with Trump Tweets "Manufacturing Blowout": What's the Real Story?

I presented six charts. Here the key one.

Manufacturing Average Weekly Hours Year-Over-Year Detail

GM Strike

The GM strike ended on October 25. And Thanksgiving was November 28, the last possible date, further skewing BLS job sampling.

Yet, there was no improvement in manufacturing hours of actual production workers!

2015 vs Today

The dip in 2015 was energy related. This dip isn't.

This manufacturing dip is related to a global slowdown in trade enhanced by Trump tariffs.

What About Hiring Trends?

I am glad you asked.

Please consider Hiring Trends in Recessions by Size of Firms

Slump in ISM and Freight Traffic

Please note Another Recession Warning: ISM Contracts 4th Month

Also note Recession Warning: Freight Volumes Negative YoY for 11th Straight Month

No Recession?

Recessions are difficult to predict. I certainly provide ample proof.

But at least people ought to discuss the actual data instead of making baseless claims.

Mike "Mish" Shedlock

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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