Healthcare Jobs


Despite the technical difficulties at the Bureau of Labor Statistics this morning, the Non-Farm payrolls were released on time.

Think it’s safe to say this was a dovish number when considering how the Federal reserve will interpret it.

Thursday WIRP   100.4% chance of a 25bps cut.

Post NFP WIRP  119% chance of a 25bps cut.

We have pointed to the contribution of healthcare jobs before and think it’s worth mentioning again. Without the 46k they contributed, the number would have been negative.

Different view.

This same phenomenon appears to be demonstrated in the JOLTS numbers as well, which were released Wednesday, September 3^rd.

As Healthcare Job Openings continue to disappear, so goes the overall Index.

The ISM Employment metric, released Thursday, also seems to reflect this trend. Below 50 is considered contraction, but when approaching the 45 level, history suggests we need to be weary of Recession.

Next week the BLS is set to release revised US job numbers for the 12 months ending March 2025. According to Goldman that revision could be as large as 950k, which would be the largest revision since 2010.

So, why the focus on the decline in healthcare jobs?

This one chart got us thinking about it.

Makes us think AI could have an unusually large impact on employment sooner than many think?


Retail Sales


If employment is starting to slow and move toward dangerous levels, it could be doing it just as retail sales are also starting to slow.

According to the St Louis Fed, FRED, Final Sales to Domestic Purchasers are moving in the wrong direction.

https://fred.stlouisfed.org/series/LB0000031Q020SBEA#

We think the chart below posted by Mohamed El-Erian is pretty good reason why the above chart is declining.

https://x.com/elerianm/status/1963421894587068622

The consumer is simply not getting the same amount of goods for their hard earned $.

Which leads us to why so many “soft” metrics appear to reflect pessimistic views regarding the consumer’s outlook on the economy.

The post below is a bit dramatic, but the chart makes the point.

https://x.com/charliebilello/status/1962954740972847455

“Only 25% of Americans say they have a good chance of improving their standard of living — the lowest since surveys began in 1987.

And 3 out of 4 don’t believe the next generation will be better off.”


Tariffs


What and where is tariff revenue being derived from?

We thought the following charts are rather informative regarding the above question. Unfortunately it may not be long before the Consumer ultimately feels the pass along.

Uncharted Territory


With respect to the WIRP charts above, even if the Federal reserve does cut rates in September, what will the actual impact be? Earlier in the week the 30yr TSY was flirting with a 5% yield, at the time of this writing its presently 4.78%, Around the world 30yr sovereigns’ yields are heading the wrong direction, despite Central bank rate cuts.

Why should we expect the US to be any different post a cut?

According to the post that accompanied the above chart it is very unusual for 30-year Treasury yield to rise in a Fed easing cycle. “It’s even more unusual for 30-year yield to rise with all the world’s major central banks in an easing cycle. This tells you monetary policy isn’t the problem. Runaway fiscal deficits are the problem.”

https://x.com/robin_j_brooks/status/1963264518131196000

The other unusual circumstance surrounding a potential Fed rate cut would be the ISM New order metric. In recent history the Fed has not begun a rate cutting cycle when the new order metric has been in expansion territory, above 50. Many consider this a leading indicator, so rare no doubt, but there is a first for everything. The new order ISM metric just printed at 51.40.

Have a great weekend!

Best,

Meraki trading team.