Friday's Data In Detail

Macro Perspectives: Mon 7 Dec 2020

The jobs report on Friday had few surprises. However, it is being positioned as a "dire" report, as a political tactic to gain more leverage in stimulus talks.

Let's look at the facts…

The new jobs added in November came in lower than expected, but still well above the average pre-pandemic monthly job gains. Slower job growth shouldn't be too surprising given that certain states went back into economic restriction mode over the past month.

The unemployment rate ticked down to 6.7% (the lowest post-Pandemic level) for the seventh consecutive month, whilst Wage growth came in at 4.4% in November, a bit better than expected with labor force participation steady since June.

Now, given the context of a vaccine coming around the corner, this jobs report proves the recovery has been good and remains in a good place.

In fact, with the addition of the economic data of the past week, the Atlanta Fed's GDP model is now projecting 11.2% annualized fourth quarter growth. If that were to hold, we would have; -5% Q1, -31.4% Q2, +33.1% Q3 and +11.2% Q4 (all annualized numbers).

That would reflect a recovery of all of the economic output losses from the Pandemic - inside of one calendar year.

That's thanks to the effectiveness of the policy response (both monetary and fiscal), and despite the hardships, the personal savings rate (at 14%) remains elevated, at the highest levels since the mid-70s. Liquidity remains plentiful.

Asset prices continue to float higher and higher.