March Jobs, CPI, and a mixed bag

The March Jobs Report issued by the US Labor Dept, last Friday didn’t deliver quite the eggs needed for a sunny economic Easter, but it did offer some rays of hope for both the Federal Reserve chair Jerome Powell and President Biden, especially as he is expected to soon announce his reelection campaign.

While jobs in the nation are plentiful, for those that want them, employers have slowed the pace of hiring from the earlier frenzied search, and the plentiful benefits of hiring bonuses, and PTO have tapered off, despite a slight downturn in the unemployment rate, and there are more people returning to work, from the sidelines, than previously seen.

Of course, the elephant in the room is inflation, and the decrease in hiring, no matter how small offers a light at the end of the tunnel for Powell, but not enough to not consider raising the interest rate again, in May; which the odds among economists for another quarter point increase is 67 percent favoring.

Still there are those that are optimistic, and one might be Michael Pugliese an economist at Wells Fargo, who told The New York Times, “I think it’s very clear interest rates are starting to play a role . . . Some of it is just normalizing. You’re obviously not going to be able to sustain the job growth we’ve seen over the past year or two indefinitely.”

The numbers: 236,000 nonfarm jobs were created in March, and the unemployment rate decreased to 3.5 percent, but there was a mixed bag in the following areas: transportation and warehousing, was little changed at 10,000, but warehousing and storage decreased by 12,000; retail, where little had changed, there was a slight decrease of 15,000.

With those numbers the mixed side, there was an increase of prime working age workers, those aged 25 to 54 years old, at 83.1 percent, but some economists debate the significance.

President Biden said, when the report was released, “This is a good jobs report for hard working Americans,” but he added, “there is still more work to do '' to reduce prices that have hit the wallets of many Americans.

Chicago based Challenger, Christmas and Gray reported that there were 89,703 job cuts in March, with 15 percent in February. But the most layoffs are in the tech sector, totaling 168,243, and according to techcrunch.com, Meta, the parent company of Google, laid off 10,000 with another 5,000 open slots canceled; and Microsoft with 10,000 laid off, in a team that was dedicated to AI (artificial intelligence) work.

Adding to this turmoil, Indeed laid off 15 percent of its tech workers, at 2,200, and Accenture 19,000, or 2.5 percent of its workforce.

On the brighter side, job gains included leisure and travel at 72,000, education and health at 65,000, and government workers at 42,000.

Coming from the sidelines, perhaps because of inflation, was a slight bump, not statistically significant, in labor force participation, from previous months, now at  62.6 percent contrasted with 62.5 in February.

Good news is that the employment rate for Black Americans has hit a record low of 5 percent. And, while much of that, and other figures, might be limited by future lower wage growth, which reached a high of over 3.2 percent between January and March, but averaged 4.2 over the last 12 months, (in March average hourly earnings were greater than 0.3 percent), but this still brings good news to those, ”last hired, first fired.”

All eyes turned on Wednesday to the Consumer Price Index, (which measures the prices that consumers pay for goods, and services), to give more detail on another major rising cost, shelter, making many Americans worry about how to house themselves, affordably. And, what we saw was that housing costs increased, despite an offset at the gas pump.

Stripping out the volatile cost of food and energy, the CPI rose to 0.4 percent, and just behind shelter was insurance, 1.2 percent increase,airline fares at 4.0 percent, household furnishings and new vehicles.

Taking a birdseye view the report showed an all time rate of 5.6 percent, year over year with the month of March, without food and energy.

The takeaway is that this report showed the rise in consumer prices was at its slowest since May of 2021, with inflation increasing by 0.1 percent over the last month, and 5.0 percent over last March.

Many economists had predicted 0.2 percent, and the reduction was seen as a sign of progress in the fight against inflation, even with the 5.0 percent increase in housing, and this pause, as some are calling it, is an indicator, along with the March jobs report for the upcoming Fed’s monetary policy moves.

Ending the economic news last week, there is is still the specter of recession for some bankers,and even consumers, and as we have noted before, some seem to gain satisfaction that it will happen, and in a recent Fortune commentary, Murray Sabrin said that it was inevitable, and citing as an indicator, the inverted yield curve, the bane of undergraduate economics, and its focus on “the difference between the 10 year Treasury note and the three month T Bill.”

While not always a perfect indicator, Sabrin seems focused on it, while admitting some curveballs in previous years, (in 1998) when the expected “short term rates rise above the long term rate a recession begins about a year later.”

Tech layoffs may be the tipping point in his prediction, but no one has a crystal ball to state when it can happen. Or, as a saying goes, “it ain’t over, till it's over.”