Payrolls looked “surprisingly strong” on Friday, with the headline number at +263,000, with +250,000 expected. That wasn’t a big difference, but markets sold off hard immediately following this release – except for oil and gasoline, which had great days, apparently unaffected by payrolls one way or the other.
Wolf Richter, who is usually on top of everything data-related, remains perplexed as to what is causing the labor market to remain so tight. He has lots of useful charts, here: (Source – Wolf Richter). For me, the labor mystery is (perhaps unreasonably) simple: paraphrasing Clinton – it’s disability, stupid. Here are my receipts: this month, self-reported disability in the population 16+ increased by a huge 907,000 people. Many of those are old people, but some (around a third) are 16-64. I claim a constantly-rising number of self-reported disabled people of all ages ends up producing a “suprisingly tight” labor market. Even if some of the self-reported disabled people can still work to some degree, the magnitude of the change (increase) in disability (almost a million people in just one month!) will end up shrinking the labor force, both by decreasing the number of able-workers, as well as increasing the need for a family caregiver which will also take an able worker out of the labor market to take care of newly-disabled mom, dad, husband/wife, or child. Most people cannot afford a home-care nurse aid.
Black line in the chart below is the smoothed 12-MA version of the choppier red line (actual series); the smoothed line is better at showing the trend, but it introduces a delay also. If you just look at the red line 2021-present, that’s the 3.2 million newly disabled people since 2021. Did something happen in 2021? I forget. It was so long ago. [My guess for the large dip in first half of 2020: a bunch of the older people in the CNP Disabled 16+ group died during year one of the pandemic.]
Here’s one more “surprisingly strong” labor market indicator: FRED series LNS12032195, or “I’m working part time, due to economic conditions/slack work.” See how it screamed higher in 2008? And look where it is now – unchanged. In 2008, we didn’t know we were in a recession until about 4-6 months in, and so this indicator was really useful because it gave us advance warning.
by redneck-engineer 
