A few thoughts about employment and consumer

Dec 11, 2023

Today, we would like to discuss two main things. The unemployment rate for November 2023 came in at 3.7%, which is really a surprise to see against a backdrop of high interest rates. However, some other trends might be worth mentioning. First, the broader unemployment indicator, the U-6 unemployment rate, fell to 7% last month from 7.2% in October 2023. Second, the number of multiple jobholders, with both primary and secondary jobs being full-time, dropped from 447,000 in September 2023 to 363,000 in November 2023. Meanwhile, the number of multiple jobholders, with the primary job being full-time and the secondary job being part-time, has skyrocketed in the same period (in fact, this metric has been growing rapidly since July 2023). On top of that, the continuous jobless claims continue to soar (recently hitting the highest level for the year), and there is an obvious decline across job openings in private, manufacturing, and nonfarm sectors. Furthermore, there are a lot of discrepancies among the employment data (going far beyond what we include in this article) that show full-time and well-paying jobs are getting replaced by part-time jobs and those that pay less.

Now, on the topic of solid spending during the Black Friday holiday. There might be one thing partly responsible for big sales (and even for consumer spending staying strong for so long), which is rarely mentioned in the mass media: financial irresponsibility. We are seeing more and more people taking on debt to pay for their expenses, which is reflected in the official numbers. However, the most concerning to us is the group of young people, especially those in their 20s. From our empirical experience, financial illiteracy among young people seems to be hitting all-time highs, and young people do not seem to care about the implications of failing to meet the debt payments; instead, they want to buy what they want, and they want to buy it now, regardless if they can afford it. In our opinion, this will backfire horribly on those who took on debt in the past few years and are yet to see their debt payments increase dramatically.

Illustration 1.01

The monthly graph above shows full-time employment in the United States.

Illustration 1.02

Illustration 1.02 displays the monthly graph of private job openings in the United States.

Illustration 1.03

Illustration 1.03 displays the monthly graph of nonfarm job openings in the United States.

Illustration 1.04

Illustration 1.04 shows the monthly chart of manufacturing job openings in the United States.

Illustration 1.05

The image above shows the monthly graph of continuous jobless claims.

Illustration 1.06

Illustration 1.06 displays the daily chart of the Hang Seng Index drifting lower within the downward-sloping channel. Today, the index marked a new low for the year (the index is still about 9% higher than last year’s lows).

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor or any other entity. Your own due diligence is highly advised before entering a trade.