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Economic Cycle Research Institute CEO Lakshman Achuthan on the outlook for the job market and economy.
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Well here's some good news for your 401K today got a boost.
The better than expected jobs report pushing the Dow up for the sixth straight day and a 67 point jump brings the index to yet another all time.
-- this is kind of business is usually states.
Traders are rallying over the unemployment rate dropping to the lowest level in four years and a surge in hiring with more this -- an action then.
CEO of Economic Cycle Research Institute it's great to see you and you have some really were interesting research out but I wanna start with today's jobs numbers don't use say they may not be all that they think is -- -- be clear here.
Seven point 7% unemployment 236000.
Jobs -- in the month.
This was not what we were expecting we weren't expecting anything this good -- -- -- -- very good news you say what.
Obsolete the consensus was 160 this is a blow out report right if you look at the consensus that expectations and you look at the headlines that came out it's absolutely blog report.
However the odds of it being a book report were pretty good.
Because there's a lot of seasonal distortions that are occurring in Q4 and Q1 in the data.
That gets it pushed to the upside would not -- given all the statistics but.
We knew that the data is seasonally would be pushed up and so all you do.
Very simple anybody can do this at home he just look a year over year growth rates of the jobs that.
And what do you find -- you -- that what you find is that payroll jobs growth has fallen to an eighteen month law.
On the household survey.
We have it falling now to a sixteen month well -- -- so.
The direction.
Of jobs growth is very very clearly.
Simple math is getting worse and that's very different from the headlines -- almost every commentator today.
You'll are here is things are getting better.
Wait wait a second because I've got it -- seeing number that I entered for the first time yesterday and I thought.
This is surprising to me jobs created so far this year -- total -- 355000.
The same period last year.
582000.
-- you would think that we had a blowout year last year.
Have to see that's a way we've we take those numbers and you you're gonna come to the same math and -- coming too which is that you over year.
Our growth rate is now down to an eighteen month low which tells us that things are not what -- -- in the -- -- Coming out of the there on the -- -- let me ask you this because a lot of people out there say the economy is on its hair.
They see what's going on with existing home sales they know the power of the housing market to belittle the entire economy -- they look at these jobs numbers they see fourth quarter GDP revised higher.
And they are saying.
This is a great economy things are turning around you know why are you so down in the dumps.
-- are well we we -- business -- right and so it looks like we've slipped into a mild recession and it's been going on for about a half a year and all of those.
Data points that you just threw me first off the stock market is not the economy anybody earning a paycheck understands that.
And that if that's what they get -- I think it's a big cap companies that do business all over the globe that are fueling that there are earnings spread other places -- that's true this is true but in terms of income do you see that it's not all that -- made up two billion people are hurting.
Then you look at housing yes we have an upturn there.
But it's from a very very low base and so the impact on the overall economy is a fraction of a percentage point of GDP may be -- the sequester might have taken away.
And then you take a look at.
Well since there's housing there's so there well I thought aren't there -- -- Most of them little kitchen -- this because up you know not everybody's on the bandwagon ever -- -- be at 5% growth for the next quarter a lot of people are are much more circumspect.
They say we're in the economy McConnell were were a bit early writing that edge of positive right maybe 2% what is is what we're gonna get.
You say at that level it is easy to tipped to the other so.
First -- I don't anywhere at that level you always hear just like you -- you always hear people they were to 2% economy.
Just do the math -- -- a year where one point 6% growth rate through Q4 Q4 was flat to take -- revised from.
Minus zero point one -- plus zero point one I mean you can get a smaller revision mathematically practically.
So we are in we're seeing GDP growth rates that are consistent with a recession.
If you get rid of all the inflation kind of estimates which are all kinds of black.
Then you look at nominal GDP we've never -- the growth rate down where it is now outside of a recession the Fed's own.
GDI gross domestic income recession measure last year.
Started to flash recession signals when they started their thing yeah.
Think we are in the wildest of recessions and you've been saying this actually since last July I don't know how mild I think it's relatively mild and it's -- you don't know until the dust settles a couple years from now isn't it miles -- -- -- -- they actually are they actually are not numbers I can't speak well you take those numbers and don't look at the headlines do the math yourself year over year real GDP one point 6% in Q4 that's rarely seen outside of a recession.
Nominal GDP and year -- year as a 3.5 percent in Q4.
That's never been seen in the last 65 years outside of a recession.
Those with us.
Just the same way that it's.
Here's saying that we're being served up this story that isn't exactly -- -- I think I think what's happening is that if you can call.
Michael the last four recessions and recoveries so it's not -- -- one way or -- were happening when there's a recovery to okay.
But I think what's going on why is that so hard to accept what we're saying.
I think people are looking for everybody's an expert on cycles now they're looking for another Great Recession.
But you know when they're not that great -- a little tougher to see nobody rings a bell in the 7375.
Recession.
It took a year till people figured out we were in a recession Paul Samuelson a lot of economists respect him as one of the -- rates.
In 19697.
B he was lecturing and and National Bureau of Economic Research that business cycles were obsolete we were nine months.
Inside a recession if he could make a mistake anybody.
Well I gotta tell you I think I think your analysis is fascinating.
And you know there's a lot of people out there who believe that.
What's gone on in this economy is in -- in some cases many CEOs are saying this is the last little -- I'm gonna get for awhile so under the take advantage of it.
-- a lot of CEOs agree with us a lot of people who are out of work agree with us.
I think the Federal Reserve agrees with us if you look by -- -- -- ally in this story about a blossom thanks for coming on tonight.
Great to have you here in fascinating analysis and not something here every day thank you so much -- revenue.
