MacroEdge 3/24 Weekly Report - Powell the Pivoter, Concerning Labor Market Data, Powell's Support for Jobs, Recession of the Poors
In this weekly report - Don, Six, and John tackle the 'recession of the poors', Powell's pivot and pledge to support the labor market, and concerning labor market data
Powell the Pivoter - More Concerned for Labor Data (@DonMiami3, MacroEdge Chief Economist)
Happy Sunday evening everyone -
I hope you all have had a great second to last weekend of March as we wind down into the March Easter weekend coming next week… Many of you probably had a chance to catch my ‘rant’ from Friday evening’s Redeye, if not you can catch up on it here: https://macroedge.substack.com/p/macroedge-redeye-staying-objective. There was plenty of hot air being blown around this week (and weekend) by a variety of different pundits and ‘experts’ - as expected. Of course, as I discussed in my Redeye rant, they ignore many of the obvious datapoints and facts that remained about the current cycle. While the 10y3m curve remains steeply inverted at over -100bps – and we are currently tied for our longest inversion on record next month in monthly terms (not days) - the largest risks for the labor market still lie ahead for the Fed and the economy. Inflation remains a huge risk as well, as highlighted in my rant. In terms of the 10y3m curve remaining a valid signal for recession, of course it remains valid and it is absurd to think otherwise until the underlying data improves dramatically. If the market determines that the Fed pivoted too early in its inflation fight in favor of early labor warning indicators - then the risk becomes the long end rising further (as some like Michael Kao have noted happened in 1982). My focus for tonight’s Ozone weekly report will be around:
> California in Recession
> The 30 States Seeing Rising Unemployment in February
> Oil Risks + Gas Price Update
> Concluding Thoughts
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California in Recession
Let us recall the length of the lag following Fed hiking cycles:
Nine months later and California’s labor market (at a state level, and on a county by county basis) is coming off of the tracks. It’s not just Silicon Valley, the Hills of LA, or the deserts of Bakersfield - the entire state is seeing broadening labor market weakness and elevated jobless claims following another winter of mass layoffs, outbound migration, and migrant issues.
