Latest Blog: Fireside Reading - 12/15/2020
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, trader and academic.
Markets have taken today’s employment release as evidence of a weakening jobs market. A mere 173,000 net new jobs were added in August, below the consensus figure of 217,000. But, coincidentally, 44,000 more jobs were added to previous months’ figures. So, you could say we were right on expectations. Clearly, today the markets disagree.
The unemployment rate fell to 5.1%, from 5.3%, and the labor participation rate remained at 62.6%, the lowest level since 1977. Baby Boomer retirements (structural) and rising disability rolls (policy—see Graph below—yes, that’s 24 million people) probably account for the bulk of the low participation rate.
So, I’m making the case that the headline numbers are not as bad as the market seems to think, and the news is encouraging even as we look a little deeper. Over the past twelve months, the economy has added more than 2.9 million net new jobs, well in excess of population growth, much less labor force growth. This growth has occurred even as part-time employment has fallen by 765,000.
Average hourly earnings are up 2.2% from a year ago, a little ahead of inflation, but hours worked are up 2.7%, so workers’ cash earnings are up 4.9%. Looking even deeper, there is reason to be optimistic about future wage growth, particularly as we see the “quit rate,” the percentage of workers switching jobs, move higher. There is a very strong correlation (0.9) between the quit rate and wage growth (see Graph below).PRINT THIS ARTICLE
Earthrise or Earthset: Thoughts on a Post-Pandemic World (Part 3) 06-02-2020
Source: NASAWeak economic growth and low investment returns are the prospects we discussed in the first two parts of ...READ MORE
Not Dead Yet 07-13-2017
According to the National Bureau of Economic Research (NBER), the self-acclaimed arbiter of economic debate in this ...READ MORE
Swiss Cheese 01-15-2015
Back in 2011, as talk of the Eurozone disintegrating was at high pitch, investors fled to the perceived safety of the ...READ MORE
We build portfolios of best-in-class investment managers across all asset classes. If you would like to be considered for our portfolios, please contact us using our manager inquiries form.
- MANAGER INQUIRIES
How Can We Help You?Institutional Investors
Fully resourced investment office built to manage sophisticated client investment programsPrivate Wealth
Personalized discretionary portfolio and wealth management services powered by institutional processInvestment Management
Rigorous process and a flexible platform designed to meet client needsArticles & Insights
Latest insights and perspectives from the Angeles teamContact Us
Get in touch