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Red Sky At Night


Because the spew of economic data is similar to drinking from a fire hose, it is helpful to focus on the most important data — employment.  If employment is improving, the economy cannot really be too bad.

After a string of good employment reports, the April report released last week disappointed most analysts.  Of course, one month does not a trend make!

Looking deeper, the number of jobs openings increased to 5.75 million, which is the highest in ten months and close to all-time highs.  The number of actual hires decreased to 5.29 million.  This gap between job openings and hires is increasing, suggesting it is becoming harder to find qualified job-seekers in a tightening labor pool.

In addition, total separations decreased slightly, due to significantly fewer layoffs.  Offsetting this is the rising number of quits, which is a good sign.  People don’t usually quit their jobs unless they think any unemployment will be temporary.

Regardless of what individual economic data points might indicate and regardless of  what the politicians might say, a recession is NOT on the horizon.

I am told that sailors often say “red sky in morning, sailor take warning – red sky at night, sailor’s delight.”  While I know nothing about weather, the economic sky tonight looks pretty red to me!

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