From a small northwestern observatory…

The Bureau of Labor Statistics just released the 94th consecutive positive monthly jobs report.  This is nearly a record, and should be great news.  Indeed, the zeitgeist among the workforce should be euphoric.  Should be, anyway….

Of course, the devil’s in the details, and our good friends at Seeking Alpha, normally a bullish lot, took the liberty of dismembering the trends and statistics, and have found some trouble right here in River City (and everywhere else, for that matter).  For sure, there has been nattering from both the learned and les gens ordinaires about things like “underemployment” and “wage growth”.  Indeed, my own earlier column, Why Things Suck, demonstrated that for the last 40+ years, wages in America have not kept up with the cost of living, and the cumulative differential is now huge.  In other words, folks are getting jobs, but those jobs really suck.

The folks at Seeking Alpha did something more interesting, though.  They looked at cycles and trends, and particularly those relative to the onset of recessions.  (Note that I looked at this same trend with respect to the Yield Curve back in late August.)  In an article on Thursday titled “Employment: It’s the Trend That Matters”, Lance Roberts did a great job of dismembering the current news into the key and critical trends.

He starts off with giving the devil his due — the seasonally adjusted trend line in employment is sharply upward.  However, when you take a peek at some of the underlying issues, you come away with some very different information.  Workforce participation stinks, in no small measure due to the fact that over-55 workers are staying in the workforce, to an extent crowding out younger workers.  He notes that for many of these older workers, retirement is simply not an option today.  Many of these folks will simply have to work until they die.

More to the point, though, the actual rate of change in employment is trending downward, both in the long-term and the short-term.  Roberts goes back several decades and finds that the general employment trend in America, as a rate-of-change percentage, is downward.

Courtesy Lance Roberts, Real Investment Advice

In short, when you take a simple linear trend over the last 3/4 of a century, back as far as we’ve been keeping good data, the suggestion is that our workforce growth is really declining.  This has some broader implications for a maturing economy with a lot of upscale opportunities, a lot of service-oriented jobs, and not much in the middle.

Of more immediate concern, though, the jobs numbers, while positive, are trending in a way that suggests a recession is not far off in the future.  Recall in my article about the Yield Curve I noted that this market looked a lot like some other trends we’d seen before.  Roberts doubles down on that with employment numbers.

Courtesy Lance Roberts, Real Investment Advice

In the end, Roberts issues an homage to those of us who watch yields more closely than employment, noting that one or the other — yields or employment — will soon break.  His question is, which first?