Some quick comments on the employment report.

Does not look good. I’m starting to have doubts about my forecast that we are just sliding into a stagnation, not a recession scenario. The household survey look especially worrisome.

But the hours worked data is not as weak. December hours worked were unchanged. The 4th quarter hours worked data is up at a 1.1% rate, about the same as the third quarter. It still implies that the second and third quarter rebound in productivity growth is probably continuing.

The new factor is weakness in finance. Employment growth in that sector just turned negative
and it will almost certainly remain negative for some time.

Finance employment is now about 6% of payroll employment as compared to about 10% for
manufacturing employment. But finance is a high wage area — average hourly earnings in fiance is $19.89 as compared to $17.66 for total private average hourly earnings. This has negative consequences for income and spending growth.