9 ms·

We entered a technical recession by the "two quarters of contracting GDP" rule of thumb, but labor numbers are still strong and that second quarter contracted l

We entered a technical recession by the "two quarters of contracting GDP" rule of thumb, but labor numbers are still strong and that second quarter contracted less than the first [1], which is not what we've usually seen when entering a recession. [2] [1] https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate https://www.bea.gov/news/2022/gross-domestic-product-second-... [2] https://www.macrotrends.net/countries/USA/united-states/gdp-growth-rate https://www.macrotrends.net/countries/USA/united-states/gdp-...

jfoster 4y ago
If companies are doing hiring freezes and layoffs, will the labor numbers remain strong?
- evan_ 4y ago
  Yeah probably, the tech layoffs amount to a couple thousand people in a labor force of hundreds of millions.
  - whimsicalism 4y ago
    Sure, but if you consider what is causing these layoffs: anticipated weaker aggregate demand -> less demand for ads but also less demand for workers -> weakening labor market. I mean, the Fed's goal right now is basically to slow wage growth so that average people are no longer bidding up the price of our limited supply.
_gabe_ 4y ago
I've never understood how strong labor numbers negate a recession. Like sure your money is worth less because of all the inflation, and your COL keeps increasing but your wages remain the same, but hey we have lots of people working. Maybe somebody smarter than me can explain how these two correlate lol.
- xhrpost 4y ago
  Hopefully I'm not being snarky here, but if you looked at another country with a smaller economy, and then saw that they employee fewer people, would you be equally confused?
  - _gabe_ 4y ago
    Only if you then proceeded to tell me that because less people are employed the country has a lower standard of living and is more economically unstable. As a direct example of this, Sweden's unemployment rate is 7.6% right now[0], and it's historically been quite a bit higher than the US's. But people say that it ranks #1 in terms of quality of life[1]. Additionally, their unemployment rate is not negatively effecting their growth[2]. So in answer to your question, yes it continues to confuse me when people try to equate employment numbers with the overall economic status of a country. You don't take any number in isolation, you look at the data holistically, and sometimes you have numbers that seem to be at odds with one another. When that happens, it requires a deeper investigation to see what's truly happening instead of taking the number you like better and using that to promote your narrative. [0]: https://www.statista.com/statistics/527418/sweden-monthly-unemployment-rate/ https://www.statista.com/statistics/527418/sweden-monthly-un... [1]: https://www.globalcitizensolutions.com/sweden-best-country-for-quality-of-life/ https://www.globalcitizensolutions.com/sweden-best-country-f... [2]: https://www.bloomberg.com/news/articles/2022-07-28/swedish-economy-expands-more-than-expected-in-second-quarter https://www.bloomberg.com/news/articles/2022-07-28/swedish-e...
    - zeroonetwothree 4y ago
      Unemployment can be measured in different ways so it’s hard to compare across countries.
- lotsofpulp 4y ago
  Strong labor numbers means wages would be increasing. Perhaps not for all income deciles, but at least the bottom ones (which is a good thing in my opinion since it helps close the income/wealth gap). What would be an issue is the labor participation rate decreasing, which it is, but it may be unavoidable due to things like aging demographics. That means fewer workers supporting non workers, and hence less supply of labor to be distributed amongst everyone (assuming it is not offset by gains in automation). I think this will be the government’s real problem, as there is no quick fix other than opening the immigration doors.
JumpCrisscross 4y ago
Google sells ads. Its relevant broad metric is consumer confidence [1]. That’s down. [1] https://www.conference-board.org/topics/consumer-confidence https://www.conference-board.org/topics/consumer-confidence
mc32 4y ago
If the labor market is so strong why is there still an eviction moratorium in place in places? When was the last time the rule of thumb was overlooked?
phpisthebest 4y ago
Labor numbers are NOT strong, we still have not gotten back to Pre-Covid Levels And U6 unemployment is raising, suer U3 is not, but U3 is a terrible statistic in the first place. Anyone saying the job market is "robust" is cherry-picking data
- whimsicalism 4y ago
  I think a lot of people took covid as an opportunity to retire and will not come back which is reflected by low labor participation numbers. Unemployment is basically the same as it was pre-pandemic. We are in a strong labor market in the sense that demand continues to outstrip supply (although this is weakening for higher paid workers in the top ~10-20%) but there has been a negative shock to supply from covid.
neuronexmachina 4y ago
> two quarters of contracting GDP Another unusual thing is that even though real GDP is down, nominal GDP is still going up: https://fred.stlouisfed.org/series/GDP https://fred.stlouisfed.org/series/GDP I suspect that if gas prices had started coming down earlier it would've brought inflation down enough that real GDP for Q2 would've been slightly positive.

jfoster 4y ago

If companies are doing hiring freezes and layoffs, will the labor numbers remain strong?

evan_ 4y ago
Yeah probably, the tech layoffs amount to a couple thousand people in a labor force of hundreds of millions.
- whimsicalism 4y ago
  Sure, but if you consider what is causing these layoffs: anticipated weaker aggregate demand -> less demand for ads but also less demand for workers -> weakening labor market. I mean, the Fed's goal right now is basically to slow wage growth so that average people are no longer bidding up the price of our limited supply.

_gabe_ 4y ago

I've never understood how strong labor numbers negate a recession. Like sure your money is worth less because of all the inflation, and your COL keeps increasing but your wages remain the same, but hey we have lots of people working. Maybe somebody smarter than me can explain how these two correlate lol.

xhrpost 4y ago
Hopefully I'm not being snarky here, but if you looked at another country with a smaller economy, and then saw that they employee fewer people, would you be equally confused?
- _gabe_ 4y ago
  Only if you then proceeded to tell me that because less people are employed the country has a lower standard of living and is more economically unstable. As a direct example of this, Sweden's unemployment rate is 7.6% right now[0], and it's historically been quite a bit higher than the US's. But people say that it ranks #1 in terms of quality of life[1]. Additionally, their unemployment rate is not negatively effecting their growth[2]. So in answer to your question, yes it continues to confuse me when people try to equate employment numbers with the overall economic status of a country. You don't take any number in isolation, you look at the data holistically, and sometimes you have numbers that seem to be at odds with one another. When that happens, it requires a deeper investigation to see what's truly happening instead of taking the number you like better and using that to promote your narrative. [0]: https://www.statista.com/statistics/527418/sweden-monthly-unemployment-rate/ https://www.statista.com/statistics/527418/sweden-monthly-un... [1]: https://www.globalcitizensolutions.com/sweden-best-country-for-quality-of-life/ https://www.globalcitizensolutions.com/sweden-best-country-f... [2]: https://www.bloomberg.com/news/articles/2022-07-28/swedish-economy-expands-more-than-expected-in-second-quarter https://www.bloomberg.com/news/articles/2022-07-28/swedish-e...
  - zeroonetwothree 4y ago
    Unemployment can be measured in different ways so it’s hard to compare across countries.
lotsofpulp 4y ago
Strong labor numbers means wages would be increasing. Perhaps not for all income deciles, but at least the bottom ones (which is a good thing in my opinion since it helps close the income/wealth gap). What would be an issue is the labor participation rate decreasing, which it is, but it may be unavoidable due to things like aging demographics. That means fewer workers supporting non workers, and hence less supply of labor to be distributed amongst everyone (assuming it is not offset by gains in automation). I think this will be the government’s real problem, as there is no quick fix other than opening the immigration doors.

JumpCrisscross 4y ago

Google sells ads. Its relevant broad metric is consumer confidence [1]. That’s down. [1] https://www.conference-board.org/topics/consumer-confidence https://www.conference-board.org/topics/consumer-confidence

mc32 4y ago

If the labor market is so strong why is there still an eviction moratorium in place in places? When was the last time the rule of thumb was overlooked?

phpisthebest 4y ago

Labor numbers are NOT strong, we still have not gotten back to Pre-Covid Levels And U6 unemployment is raising, suer U3 is not, but U3 is a terrible statistic in the first place. Anyone saying the job market is "robust" is cherry-picking data

whimsicalism 4y ago
I think a lot of people took covid as an opportunity to retire and will not come back which is reflected by low labor participation numbers. Unemployment is basically the same as it was pre-pandemic. We are in a strong labor market in the sense that demand continues to outstrip supply (although this is weakening for higher paid workers in the top ~10-20%) but there has been a negative shock to supply from covid.

neuronexmachina 4y ago

> two quarters of contracting GDP Another unusual thing is that even though real GDP is down, nominal GDP is still going up: https://fred.stlouisfed.org/series/GDP https://fred.stlouisfed.org/series/GDP I suspect that if gas prices had started coming down earlier it would've brought inflation down enough that real GDP for Q2 would've been slightly positive.