by Pater Tenebrarum
Acting Man
Another Strong Payrolls Report – is it Meaningful?
This morning the punters in the casino were cheered up by yet another strong payrolls report, the second in a row. Leaving aside the fact that it will be revised out of all recognition when all is said and done, does it actually mean the economy is strong?
[…] As we usually point out at this juncture: apart from the problem that US labor force participation has collapsed (i.e., millions of unemployed people have been defined out of existence), employment is a lagging economic indicator.
Nevertheless, payroll data and initial claims usually tend to give some advance warning ahead of recessions. As long as they remain strong, it is fair to conclude that a recession is probably still a few months away at a minimum. Note though that the warning signs from these indicators usually come very late in the game.