The Fed is using a new indicator, the “Labor Market Conditions Index” to dictate its outlook on employment. Given its recent adoption and the Fed’s almost manic “on and off” opinions on rate increases one has to wonder if they are only seeing short term trends and not the larger employment picture??? If you look at longer term charts, it clearly better:
Despite unprecedented retirements of the boomers (~10k per day), the employment to population ratio is climbing:
Employment, rolling along:
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
Personal Income….up and to the right:
Unemployment duration continues to fall:
The unemployment rate still falling:
So why then does the Fed seemingly change its message on rate hikes almost weekly???
There are 19 inputs to this indicator. Those which are % of population or nominal changes in avg hourly wages without some adjustment to normalize to account for 1) Baby Boomer retirement at 10,000/day or 2) inflation impact on wages means the numbers are less useful than they could be.
Here is the chart of what the Fed is seeing now. No wonder the Fed is ‘On again-Off again’ about its own actions. They do not know how to look long term and it appears that they are short term momentum decision makers.