US labor market – another perspective

• Strength of the US labor markets have surprised market participants, economists as well as FED and to such extent that FOMC participants slashed the forecast for all key indicators namely inflation, GDP and interest rate but unemployment rate.
  
  
• US economic activities are growing, however it has remained less robust than labor market.

Strength and trends in the labor market is presented in a different angle. Chart is attached for explanation. Indicators are from conference board survey. Chart courtesy Ed Yardeni.

• Job hard to get - Near about 50% of participants in conference board survey at height of the financial crisis in 2008 said that job was hard to get, a record since the great depression, even aftermath of dotcom bubble burst, that number only reached around 35%. However it has gradually came down to current 26%.
  
  
• Job plentiful - At the peak of the crisis only below 5% of the respondents said that jobs are plentiful which eventually by the years rose to 20.5%. During the dotcom bubble the number rose to above 55% before the bust.

Analogy -

• It is notable, that major pickup in economic activities and interest rate hike took place in most cases when these two cross over. Stock market also performed well but moved into bubble area, notably after the cross over and rise in plentiful number.

• This shows that US economy is gradually improving but yet to accelerate significantly. Without significant cross over, FED rate path might remain slow.