re: Jobs number blows out expectations - 528k vs 268k expectation, unemployment falls to 3.5%

Where are they?

We can’t get people to work here.

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Household Survey Full Time -71,000 Part Time +384,000 Multiple Jobs +92,000

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For what it’s worth, the jobs number comes from payroll data, not the household survey. Payroll data says there have been over 900k jobs added in June/July.

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For me, the bottom line is that it simply doesn't make any sense to be creating more jobs when the economy is contracting due primarily to inflation and that inflation is still running high.

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That’s a macro view. Certain industries (like mine) are still starving for skilled workers. We’ve seen absolutely no slowdown in demand.

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The economy isn’t really contracting though, at least in a traditional sense. Nominal GDP was up like 7%.

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That's smoke and mirrors. GDP is measured in currency exchanged for goods and services, not units sold. When we look at Nominal GDP within a year's timeframe where inflation has been consistently over 5%, the higher prices due to inflation therefore make such a comparison into apples and oranges.

But let's say we go with Nominal GDP...



Then we're still seeing the economy has slowed down every quarter since Q4 2021, the only difference being that Real GDP shows the economy shrinking whereas Nominal shows it's rate of growth has slowed but it's still growing. How does an economy grow in an environment of constant high inflation?

It doesn't, especially when inflation is outpacing wage growth.



This is why Real GDP is better in determining growth, especially in a period of high inflation. When looking at Dollar sales to determine growth or shrink, you have to base your currency on a standard value so when you are comparing Q2 2021 to Q2 2022, you're comparing apples to apples. This is how we can look at the GDP data and say the economy really is contracting. What this all means is that the rate of inflation has been so high for so long and has outpaced wages by so much that what we see as higher Nominal GDP is really fewer items being sold for higher prices. An economy whose Nominal GDP is growing only because it's selling fewer things but at higher prices is not a healthy economy, and if we're to be honest about it then it's not really an "expanding" economy (thus it must be contracting since it is indeed changing).

This is why the NBER uses Real GDP over Nominal when making its findings on recessions.

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China is done as a major US supplier and will continue to disconnect.

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Saw something interesting in an article on the whatever they are calling it now spending bill on this point:

“Automakers and consumers likely won't be able to take advantage of this tax credit over the next few years. At the insistence of Democratic Sen. Joe Manchin, the tax credit was written in a way so that automakers are forced to move their EV supply chains away from China and to the US and countries where the US has free trade agreements. Vehicles must be built in North America, and EV batteries must also not come from countries like China.

As a result, US automakers likely won't be able to offer the credit in the next few years as they try to build up their domestic supply chains, Democratic Sen. Debbie Stabenow of Michigan said.“

I assume that restriction has loopholes big enough to drive Tesla through, but interesting nonetheless.

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I understand real vs nominal, but nominal is probably a better gauge for job growth.

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I disagree because you're still not judging time periods on an even field. There's a skewing effect due to inflation. Granted, having 2% or less inflation is pretty negligible for YoY comparisons, but it's still not going to be as accurate as comparing them using the exact same Dollar values.

And 2% inflation is far from the scenario we're in.

For the entirety of Q2 this year Inflation was over 7%, so if Nominal was 7% then the inflation factor erased those gains. More money is being made, but it's worth less. If Nominal GDP isn't rising as fast as Inflation, then the economy is indeed contracting. Especially with wage growth being well out-paced by inflation as well.

In this specific environment, trying to see a positive from Nominal GDP growth is like a small-breasted woman finding a lump in her breast and seeing that as her boobs are getting bigger. It's a sign that there's something very wrong under the surface and it needs to be addressed, not viewed through rose-colored glasses.

I can’t believe that number unless they made a few adjustments to get there. Plus we’re still not creating new jobs. Recently seeing companies announcing layoffs.

Doesn’t add up

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unemployment falls to 3.5%

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This should be your first and last sign needed to stop paying attention to the numbers coming out of this administration.

I think they're just operating from old Benny Hill scripts.

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This should be your first and last sign needed to stop paying attention to the numbers coming out of this administration

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I know it’s just anecdotal, but do you know anyone that’s unemployed right now? I don’t have a single peer that is looking for work and can’t find it.