Employment Report

The employment report confirms other evidence that the economy is accelerating to the downside. In comparison to other recession this looks like a very typical recessions. But to see how sever it is we will have to wait to see how long it last.

Hours worked are weakening even more than earlier in the year. In the second quarter the index of hours worked was 107.2. In the third quarter it averaged 106.6 and in October it was 105.9, so early in the fourth quarter hours worked are signaling a weaker quarter.
This is in line with auto sales and other reports from retailers. In October on a seasonally adjusted annual rate auto sales were down 15.5% from September. This is the growth rate that will go into October retail sales and real personal consumption expenditures (PCE). This implies that fourth quarter real PCE growth is likely to be weaker than the 3.1% drop in the third quarter.

Both measures of employment are also getting worse and this chart includes the revisions.

Wage growth is also slowing sharply just as it should. This implies that worries about inflation are misplaced even though unit labor cost popped up last quarter.Interestingly, the S&P 500 closed at 899 on 10 October and has a closing low of 848.9 on 27 October. As I write this it is 921 so all the talk about an Obama stock market crash does not seem to be holding up very well.