Soft Landings

We may have been encouraged by Chair Powell’s relative optimism that a recession can be narrowly avoided. But he’s been talking soft landing the entire time, we just never believed him until now.

Too much of a good thing? Or too good to be true?

Fun fact: According to this morning’s BLS report, the US economy lost 2.5 million jobs in January. It’s only the seasonal adjustments that get us to the gain of 517,000 that’s making headlines.   The unadjusted job losses are the smallest percentage decline for the month of January since 1984. But that could be for all kinds of reasons, like warmer than normal weather and employers holding on to seasonal workers for a little longer than normal.   TLDR: The job market may not be as tight as the adjusted data suggests.   Why so surprised?

That bottom row, information, has been making all the headlines and souring sentiment. But Big Tech is bigger in our minds than it is in reality. Job losses at the likes of Google are easily outnumbered by gains at the likes of Chipotle.   That’s not the worst thing:

You might rather write code than sling burritos, but tighter conditions at the lower end of the jobs market means the gains are going where they’re most needed.   Landing softly?

Overall, wage growth decelerated to 4.4% in January, bringing it rapidly toward goldilocks territory: Not too hot, not too cold.   Not landing at all?

The unemployment rate hit a 53-year low of 3.4% in January, suggesting most everyone who wants a job (be it making software or making burritos) has one. This will make the Fed nervous.   Landing aborted?

On Wednesday, the BLS reported job openings rebounding by 572,000 to 11 million for the month of December. 11 million is a lot! Powell’s soft landing scenario which no one believed until now has been predicated on job openings falling with minimal layoffs. Now we’ve got job openings rising with no layoffs. Hmmm.    It’s not just the jobs data:

The ISM Services index rebounded back into expansionary territory with this morning’s print of 55.2: “A majority of panelists indicated that business is trending in a positive direction.” New orders shot up to 60.4.    And it’s not just the US:

An IMF report out this week projects every major economy other than the floundering UK to record positive GDP growth this year.