Three numbers that matter

Katie Martin (0:06)

Pushkin. How healthy is the US economy, really? It's a tricky question to answer, in all honesty, because the economic data is still a bit screwy since the federal government shut down earlier this year. If you are confused, don't worry, because Donald Trump says it's great. We are poised for an economic boom, the likes of which the world has never seen, he said this week. Poised, maybe. The general public, though, is not convinced. People are worried about all sorts of things, inflation and that kind of thing, and they are cautious on spending. Today on the show, inflation, jobs and market plumbing. We'll tell you the numbers that matter. This is Unhedged, the markets and finance podcast from Financial Times, and Pushkin and Katie Martin are slightly hungover markets columnists with coffee spilled on my white top here at FT Towers in London. It's one of those days.

And I'm joined by the magic of the internet by that guy, the very reverend Robert Armstrong of the Unhedged Newsletter.

Robert Armstrong (1:10)

My head is clear as a bell and my shirt is spotless. I would just like the record to reflect.

Katie Martin (1:17)

I am very pleased for you, Rob. How is Christmas party season treating you though? Are you partied out yet?

Robert Armstrong (1:23)

No, I'm still into it. We have the US Unhedged Christmas lunch today.

So we're all going to go out and eat goose and mince pies or something.

Katie Martin (1:35)

And go wild.

Robert Armstrong (1:36)

Yeah, go wild. It'll be great.

Katie Martin (1:37)

Yeah. I mean, we're nearly there, folks. The year is almost, almost, almost over. But so, yeah, what's the sense from over there about what the US economy is really up to? Because it's a bit of a cloudy picture, isn't it?

Robert Armstrong (1:53)

Yes, it is cloudy. Let's start with jobs. We did get a November jobs report, and the headline that the FT landed on, and everybody else landed on, was a higher unemployment rate at 4.6 percent. That is a relatively low historic number, but the trend is going the wrong direction.

Katie Martin (2:13)

So this is weird, isn't it? This is the payrolls data that we normally get on the first Friday of every month.

Robert Armstrong (2:19)

Yes.

Katie Martin (2:20)

Like, this is like just metronomically, like everybody knows that's when the payrolls data comes out. But because of this whole stupid situation you had, it's all gone wrong.

Robert Armstrong (2:30)

Yeah, we shut down the government for reasons that no one remembers any longer, but we did. And so now all the important economic reports are coming out sort of when they come out. We're playing catch up. So anyway, we have November numbers. We are hoping we can rely on them, fingers crossed. And the unemployment rate, which you figure out by literally going to households, it's calling people up and saying, have you been fired and you create the sample or hired, or did you go to part-time work and you do the sample that way? That ticked up a little bit. That may have, there was an unusually high number of people who said they were on temporary layoff in that survey. And that's a volatile number and that may reverse, and we may go back down to 4.5 or whatever. But again, the trend there is not great.

The other half of the jobs report comes from calling not households, but bosses, companies, and saying, are you hiring? How many people have you hired? Et cetera, et cetera. And that side of the survey is a bit confusing because we had all the Doge, Department of Government, Efficiency-Driven Government Layoffs officially landed in October. So we had this huge drop in October, and then a few stragglers in November. So for that side of things, the payroll numbers, you have to put aside the government, because the federal government is doing all this crazy stuff that hopefully it won't do again. And if you just look at private employers, things are okay. The numbers are positive, we're adding. On average, in the last six months, you're adding 50,000 to 100,000 jobs, maybe a month in that neighborhood, which is, I use the word fine. And not fine with a smile and exclamation point, the okay fine sense of fine. You know what I mean?

Katie Martin (4:34)

So it's fine. It's a bit better than meh, but it's not.

Robert Armstrong (4:39)

We notched up from meh to fine.

Katie Martin (4:42)

Yeah.

Robert Armstrong (4:43)

And part of the reason here, of course, as we've discussed on the show before, we have this big change in immigration, we have aging demographics. So there is an ongoing mystery about how many job additions is enough for the economy to be in a steady state in this low-immigration, aging economy. You know, it may be that just 10,000 or 20,000 or 30,000 job additions is enough to kind of keep the economy and the unemployment rate going sideways.