Tom Explains Lower Than Expected New Jobs Reported Today
Transcript:
Katie Nealis:
So we have another question in from Ryan. And Ryan’s question is, “What does the low jobs report mean? Especially since it was lower than expected?”
Tom Vaughan:
So all week, they’ve been talking about the expected number of new jobs to be reported today, for April, for last month, was supposed to be around a million. And we’ve been pretty much coming in higher than expected on almost everything to be honest. And then there was a lot of talk and rumors and articles about the possibility of coming in much higher than that a million and a half or 2 million. And then there was all kinds of concern about that, because that would be a lot of jobs all once. The Federal Reserve might have to start raising rates, which the market doesn’t like. So now, we had just the opposite today, pretty surprising number 266,000 jobs. And that is the biggest miss compared to the expectations since 1998. And so, there’s actually a whole bunch of factors that are coming in there, and they’re all a little bit different as to how you look at them. But the people are still getting an extra $300, from unemployment insurance per week that goes through September, maybe some people don’t want to take a job because of that.
People are afraid of the virus, as far as that goes. So the jobs are there. But they’re not really being filled as quickly as possible. Although, there’s one other key area, and that’s that I read an article it says of roughly half the kids that are in school are still at home. And so obviously it’s somebody is probably at home with them. And they’re not taking a job because of that. So that needs to clean up. But there have actually been some jobs shrinkage that happened in April, because of shortage of certain types of supplies. Like in the automobile industry. 27,000 jobs disappeared, big, at least temporarily, because the semiconductor shortage, and so they’re having to cut back on the number of cars and trucks that they’re making. So now, the market is pretty excited today. If you look, there’s a tremendous amount of green and the market took off soon as it saw that number. Which seems counterintuitive, right? Why would the market go up?
When unemployment wasn’t as good as it was, when employment a new jobs weren’t as good as expected? And really, is because the market looks at kind of like Goldilocks, they don’t want an economy that’s too hot, don’t want one that’s too cold. They want one that’s just right. And so having a little bit less jobs right now, take some of the pressure off of having an economy that might be too hot, and the market just jumps so you can tell how important potential inflation is to the market and what the Federal Reserve might have to do by looking at what happened today. So it’s a it’s a weird thing. Bad news was good news to the market in the employment arena. And it wasn’t negative jobs, because that 266,000 were lost that could be so it’s still a fair amount of jobs added. It wasn’t what was expected. And I bet you anything, though, next month could be a big makeup, we might see some big numbers, but we’ll see.
Easan Arulanantham:
Do you think theconsumer data, just like spending, is going to start shooting up? Because do you think little jobs will lag behind that kind of in the reporting?
Tom Vaughan:
Yeah, they’re having a hard time getting all the people into these jobs. And people are, you know, you’re reading stories about, like restaurants or putting signs up saying, “Please, bear with us, we’re having a hard time getting new people into work. Please be nice to the people that did show up.” And so, yeah, I think that pent up demand is going to come out really strong. And, and that again, and one thing that was part of this jobs report is they actually increased wages by .7%. So as an attempt to, attract people out of their house, they’re starting to pay more, which is a good thing all together, but then that’s another inflationary potential to so lots of interrelated pieces but yeah, consumer spending is going to be the driver there.