Consumption was flat, in line with expectations.We now have a picture of the following key metrics, followed by NBER business cycle committee.
figure 1: 2012 Nonfarm Payrolls, NFP (Dark Blue), Bloomberg Consensus (Blue+), Private Employment (Orange), Industrial Production (Red), Personal Income Excluding Transfers (Green), 2012 Manufacturing and Trade Sales $ (black), Consumption $ for Ch.2012 (light blue) and Monthly GDP $ for Ch.2012 (pink), GDP (blue bars), all log normalized to 2021M11=0. Q3 Source: BLS, Fed, BEA, from FRED, IHS Markit (nee Macroeconomic Advisers) (published 12/1/2022), and authors’ calculations.
Note the increase in non-farm payrolls throughout the first half, and the decline in personal income excluding current transfers. NFP and civilian employment trends throughout the first half don’t quite line up with recession talk. However, there has been some discussion as to whether the non-farm payrolls are the right measure of growth. In Figure 2 I show the cumulative growth rate of the replacement series since 2021M11.
figure 2: Nonfarm payrolls, NFP (dark blue), preliminary benchmark NFP (pink), private employment adjusted for the NFP concept (orange), private NFP reported by ADP (light green), total employment covered in the Quarterly Census of Employment and Wages Number of people (dark red) ), all logs are normalized to 2021M11=0. The authors seasonally adjust QCEW employment using Census X-11 after log transformation of X-13. Sources: BLS, Federal Reserve, BEA, from FRED, and authors’ calculations.
Note that preliminary March 2022 benchmark revisions imply a higher trajectory for NFP when tax/regulatory data are taken into account.I show it as a pink line (see discussion here).
Given the historical correlation, it makes more sense to put weight on the institutional series than the family series. The fact that the ADP series tracked the BLS NFP series supports the thesis that employment actually rose throughout the first half.
