January 4, 2018

December 2017 ADP Employment Report: 250,000 Private-Sector Jobs Added (ALSO See Conference Call Notes)

Filed under: Economy,Taxes & Government — Tom @ 8:41 am

From ADP:

Private-sector employment increased by 250,000 from November to December, on a seasonally adjusted basis.

From the press release:

“We’ve seen yet another month where the labor market has shown no signs of slowing,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Throughout the year there was significant growth in services except for an overall loss of jobs in the shrinking information sector. Looking at company size, small businesses finished out 2017 on a high note adding more than double their monthly average for the past six months.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market ended the year strongly. Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat.”

Previous month changes were inconsequential.

CONFERENCE CALL NOTES:

Mark Zandi: Very strong month. 2017 was another good labor market.

Strong pretty much across the board. Retail and transportation well, reflecting strong Christmas sales at regular and online stores.

Retail increase may be due to anticipation of tax cut. Stock market has been surging. Relatively healthy wealth effect improving confidence and people spending more out of their income. Tax cuts probably have their fingerprint on the employment numbers.

Should see this continue for the first quarters of 2018. Tax cut will lift GDP to 2.90 percent instead of about 2.50 percent without it.

Job growth is far more than what is needed to accommodate new workforce entrants. Employment rate will come down to mid-3% level, even lower than the late 1990s. Expectations in workforce participation in response to all of this, and more people will come back into the workforce, but the effect is limited because the people who stepped out it will take a lot to bring them back in (disability, incarceration, geographic issues and inability to move).

Wage pressures will develop even more throughout 2018 than currently are present. Expects consistently over 3 percent. Inflationary pressures will become more visible, expecting upside surprise on that front.

Federal Reserve will have more rate increases this year, and we need to worry about the economy overheating. For the time being, things are quite impressive, job machine is in full swing.

Questions:

Me on BLS/ADP difference — BLS will catch up mostly with comprehensive revision. GDP has been stronger than past few years would indicate.

Rugaber of AP — will we get back to low 3s seen in the 1950s and 1960s? Why should we believe that wage increases are really going to happen, when they haven’t happened yet? Answer is that at some point you “run out of bodies” and you have to start paying more to get and keep people. Zandi insists that real wage growth HAS accelerated a bit. Inflation has not accelerated, but this year it probably will because a number of “one-off” issues from 2017 will go away.

Fewer immigrants will make workforce growth tougher. Mid-3s in unemployment rate is coming. We’ll seen 2 million more jobs in 2018, maybe 300K due to tax cut. Productivity should improve, more retraining and retention efforts.

Mark H, BankRate — Distribution of tax cut job growth? large companies might fare better because tax cuts were designed to help large multinationals more than smaller businesses. Large companies have an advantage in a tight labor market to attract workers vs. small business trying to hang on to their people.

Tightening labor market is a worldwide phenomenon.

Susan, Detroit Free Press — industry growth, particularly in Midwest? Manufacturing should have a good year, because everyone worldwide is growing and the dollar is down means there should be export growth. Housing should be strong, even with a slow ramp-up. Vehicle sector should be strong, but it’s topping out and shouldn’t increase by too much more than the current 17-plus million. Home sales will hold their own, but not improve that much because of tax-cut limits on interest deductibility in high-cost blue states; therefore, vehicle sales won’t increase by all that much.

FLASHBACK: A year ago (January 2017 after December 2016 ADP report), in the second conference call after the election, Zandi said (with some paraphrasing based on note-taking):

Once the economy gets to full employment, the amount of jobs that can be created by definition will be dictated by the increase in available labor supply. That number is about 1.25 million people per year at most, translating to 100K per month, but we can’t expect any better than that for the next four years (about 5 million). We’re NOT going to create more than that, and it CANNOT change unless MORE immigrants come into the country. The labor supply is FIXED, and job growth CANNOT improve without more immigration.

Yet ADP shows 2.530 million private sector jobs added in calendar 2017.

How can that be?

We simply must to be at full employment by now, because in September 2014, Zandi told his ADP audience that full employment was 5.5 percent. (Yet we’re at 4 percent now, and we’re still not seeing powerful upward pressure on wages.)

So Zandi is essentially saying that the economy during the first year of the Trump administration has done what was thought impossible a year ago.

Not News: DNC Co-Chair Holds Up Violence-Advocating Antifa Book to Harass Trump

Wednesday afternoon, Democratic National Committee Deputy Chair Keith Ellison tweeted an image of himself holding Antifa: The Anti-Fascist Handbook, accompanied by the following grammar-challenged message: “I just found the book that strike fear in the heart of @realDonaldTrump.” Given how even low-level Republicans have been harassed out of their jobs for far less offensive tweets and statements, one would hope that the press would report Ellison’s endorsement from his official congressional Twitter account of a group which the Obama administration’s FBI classified as a terrorist group almost two years ago. Readers should not sit by their computers TVs waiting for this to happen.

(more…)

Thursday Off-Topic (Moderated) Open Thread (010418)

Filed under: Lucid Links — Tom @ 6:00 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: Chicago Bears Owner Will Speak at March for Life to Condemn 45 Years of Legalized Abortion

Filed under: Life-Based News,Positivity — Tom @ 5:55 am

From Chicago, via Life News:

DEC 18, 2017, 5:38PM

The March for Life Chicago is expected to be the largest pro-life gathering in the Midwest. Among the speakers are a co-owner of the Chicago Bears, a former Planned Parenthood director, Archbishop of Chicago and the Executive Director of the Billy Graham Center for Evangelism.

The 2018 March for Life Chicago will draw large crowds (currently estimated to be 6,000 +) of pro-life advocates from across Illinois and the Midwest. On Sunday, January 14, 2018, people from all walks of life will come together on Chicago’s Federal Plaza to proclaim the sanctity of human life and call for an end to abortion as they march through the Loop beginning at 2 p.m. CST.

Archbishop of Chicago, Cardinal Blase J. Cupich and the Chicago Bears’ co-owner Pat McCaskey are among the featured speakers.

March for Life Chicago Board of Directors President Dawn Fitzpatrick explained that the peaceful march through the streets of Chicago is a reminder that people of Illinois and throughout the Midwest desire to change the societal perception of abortion. …

Go here for the rest of the story.