Might we see a minimal job loss recession? Why not?
|Job openings are the key reason many people believe a recession is not in the cards. OK, what if?
Nonfarm Payrolls data from BLS, chart by Mish
To recover jobs to the level they were at pre-Covid, the economy needs 152,504,000 minus 149,721,000 jobs (2,783,000).
But to recover to the trend the economy needs 6,279,000 jobs.
Job Openings
Job openings data from BLS, chart by Mish
What if instead of firing millions of leisure and hospitality workers, the openings vanish?
Will we need construction workers if housing slows?
What about manufacturing jobs if the automotive sector takes a dive?
Comparison to Double Dip Recession
Nonfarm Payrolls data from BLS, chart by Mish
If we look back at the 1980-1981 double dip recession, the number of jobs lost was minimal.
The 1980 recession gained jobs for the first two months of the recession then compared to pre-recession lost less than a million jobs.
The larger 81 recession lost less than 2 million jobs.
In both cases, the number of jobs rose before the recession ended in stark contrast to the housing bubble bust.
Nonfarm Payrolls 2006-2014
Nonfarm Payrolls data from BLS, chart by Mish
Comparison
- The housing bubble "Great Recession" suffered immense job josses with a very slow job recovery.
- The double dip recessions in the 1980s had small job losses and speedy recoveries.
I expect the next recession to look much more like the 1980s inflationary recessions than the housing bubble "Great Recession".
I also envision very steep stock market declines. As a result of the stock market wealth impact, people start looking for work even some of those who retired early.
So while the employment loss may be relatively small, the change in unemployment rate is likely to be more significant.
What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?
The answer is nothing or next to nothing. Rates hikes will not impact inelastic items.
For discussion, please see What Can the Fed Do About the Price of Food, Medicine, Gasoline, or Rent?
Bubbles Will Pop
If you think the Fed can fix decades of easy money and reckless Congressional spending while not remotely understanding inflation, you are only nuts.
Please note Most People Have No Idea How Much Stocks are Likely to Crash
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.