June Jobs Report: Not Sinking, But Not Surging. Just Treading Water. | Diving In

The latest jobs report just dropped. Let me start by
telling you why it's important. This is the most timely
and most accurate indicator of the state of the economy,
and we've just learned where we were in Gune. Of course,
like any data, it's not going to be perfect. Look,
here's today's big story. It's basically that the economy is
not sinking and it's not surging. We're treading water. Let
me give you some numbers to help you make sense
of all of that. So this job's report tells us
that employment grew by fifty seven thousand over the month.
If I told you a number like that a few
years ago, you would have said fifty seven thousand, that's
not very much. Most months, the economy grows much more
one hundred and fifty, two hundred thousand, and three hundred
thousand numbers like that, Yes, and this is a different economy.
Let me explain why. The most important thing that determines
the pace of jobs growth is actually the rate of
population growth. More people both means more buyers and more workers.
We're seen a sharp contraction in population growth under the
Trump administration, mostly due to immigration crackdowns. Also, people aren't
coming in even if they wanted to in a bunch
of cases. So what that means is, as this concept
called break even jobs growth, it's basically, how many jobs
do we need to create per month in order to
just keep everything nice and steady. And a few years
ago you might have set one hundred and fifty thousand
or even two hundred thousand. Now the truth is, we
don't know what it is, but we do know what's
going to be a lot lower, and a reasonable estimate
might be round about sixty thousand jobs. And so this
month we got about sixty thousand jobs and the unemployment
rate remained roughly constant. So maybe we really are just
treading water. We're hitting break even jobs growth. So that's
the first thing. Sixty thousand jobs are created. That's well
below expectations. Markets are expecting around about one hundred and
twenty thousand jobs to be created, So don't think of
this as double. Just think of it as they were
expecting a few more. So they were disappointed by this.
Second thing to understand is this comes on after a
month ago. The last job's report was unbelievably strong. It
wasn't just that we got very strong jobs growth, we
got positive revisions for the two previous months, and it
looked like someone put the pedal to the metal. Well,
we've subsequently learned that a lot of that job's growth,
or some of that job's growth was illsory. So the
main job's number was revised down by forty three thousand
and two big growth of one hundred and twenty nine,
and April was revised down by thirty one thousand and
so basically you put it all together, and this is
an economy that over the past three months has been
creating round about one hundred thousand jobs a month, maybe
a little less, maybe a bit more. I'm trying to
do math in my head right there. I'm not very
good at it. So maybe that's enough actually to meet
that break even job growth. And so that might explain
why the unemployment rate it had been slowly drifting our
and then it may be at flatlined, but it might
be slowly drifting down right now with this recent surge
in jobs growth. So well, we have as positive jobs growth,
not as much as we thought we had for previous months,
and not as much as we hoped we would have
this month, so disappointing relative to expectations, but in a
pretty good spot. So now the unemployment rate is four
point two percent. That's just down a tick from four
point three percent. But overall the unemployment numbers have been
looking reasonably good. And by the way, if I keep
looking away, that's just me trying to check out all
my graphs and facts and figures as we're talking right here.
Another big question with all of this is, you know,
how should you think about it? Today is the day
in every month where you should really update your thinking
about the economy. So, as I said, not thinking, not surging,
treading water. The other thing that I think people often
think about at a time like this is what does
this mean for the Fed? Okay, so a month ago
we saw two things going on at the same time.
We saw inflation predominantly because of the Iran War but
also because of tariff's and you saw the job market surging.
Look when the job market surging, you're worried about more
overheating and more inflation. So what you had was two
reasons that would have been pushing the Fed to raise
rates and zero reasons. I'm sorry President Trump for cutting
rates anytime soon. What you've seen is the job This
Job's report suggests a more sustainable rate of jobs growth,
less likely to cause overheating. So but we still have
inflation which is pushing towards a rate rise. So I
think the case for a rate rise has gone from
unmistakably obvious to moderately weaker but still reasonably strong. And
you should continue to expect that the Fed is going
to be looking at rate rises at a time when
unemployment is either flat or falling and inflation is high
and possibly even rising. Hey, look, it's too easy for
people to focus on what this month's number is. Every
month's number is noisy, every month gets revol And yes,
by the way, we still believe these jobs numbers are true.
I've talked more about that in past videos. But we
really want to use this to take track of how
the recovery or this economic expansion as a whole is working.
And so there's a few longer run stories that we've
really been focusing on platypus economics that I want to
keep focusing on here. The first is possibly the most
surprising or possibly most interesting thing going on, which is
since January twenty twenty five, ninety percent of all jobs
created under the second Trump administration have gone to women
of all non farm payrolls jobs. That's a stunning fact.
It's an interesting imbalance. And in fact, women now hold
a majority of all non farm payrolls jobs, as they've
done for a few months. It's an interesting fact on
its own. It's a doubly interesting fact when you juxtapose
it with the story of the economy that one hears
from the administration. It's a story of hard hats and
blokes and steel steel, toad birds and big buffy fellas
getting back to manufacturing. But that's not what's been happening
at all. This is an economy that has grown largely
through the service sector in predominantly female fields. That's a
lot of what's going on here, But you know, interesting
to keep your eye on. This is an increasingly feminized workforce. Now,
the next important part of this analysis actually helps explain
what's going on. This is also an unbalanced economic expansion.
In fact, all of the economic expansions since January twenty
twenty five, more than one hundred percent of it, is
due to the growth of health care and social assistance.
Once you look at healthcare and social assistance, if you
took that out of the picture, the rest of the
economy has actually shed jobs overall. That's really quite striking.
That's not to say if healthcare hadn't happened, the rest
of the economy would have shrunk. A lot of workers
would have moved across found other ways to find jobs.
But it is a strikingly unbalanced economy. You know. I've
looked a little harder at this and some other data,
and it's not unusual to see this sort of imbalance
in an economic expansion. So I think what's more striking
here is the juxtaposition of the reality of our economy,
which is it's the care economy that is really growing,
and over the past month, that care economy is just
it's been absolutely relentless. It grew this month, that grew
the month before, It's been growing month after month. The
rest of the economy basically flatlined. Grew a little bit
this last month, but it's still far behind where it
was a year and a half ago. And so by
the way that this grow enormous growth in healthcare and
social assistance while the rest of the economy has actually
created less jobs, gives you a sense of why for
many people it feels like economic opportunity might be shrinking
if you're not in the healthcare sector. In fact, it is.
This also explains what's going on with the gender composition
of this economic expansion these healthcare is a traditionally predominantly
feed my occupation. They were already employing a lot of women.
Now are as it expands, they're continuing to employ a
lot of men. Keep your eye on this space, because
it suggests that if this continues, and actually I do
expect it to continue not just for years, but for decades,
then men are going to have to come to terms
with the fact that the future of the economy looks
very different than the past, and what were historically masculine
jobs are no longer exclusively the domain of men. And
that really brings me to the one industry the administration's
focused most squarely on has been manufacturing, and they've delivered
literally nothing on this manufacturing. The US economy has been
shedding manufacturing jobs for decades and nothing has happened in
the last year and a half to reverse that. In fact,
manufacturing jobs have fallen over the last year and a half,
despite all of the efforts of the administration to talk
about factories, to create jobs, to do deals and so on.
There's a cheeky fact, by the way, which is that
the first few months of the Trump administration didn't see
much of a fall in manufacturing employment, and then came
the so called Liberation Day tariffs. These were designed to
help manufacturing, but in fact, since then that is when
the drop off in manufacturing employment really took off, and
so we lost a lot of manufacturing jobs. Subsequent Liberation Day,
the trade war has changed a lot since then, something
I'm going to continue to talk about in other videos.
But when the Supreme Court struck down those Liberation Day tariffs,
in fact, that's when we've got a little bit of
a turnaround in manufacturing. Is that cause an effect or
is that coincidence or is that something else going on? Honestly,
I can't tell you, but I do know that the
promised manufacturing revival is not here. Continuing to talk about
it isn't helping any of us. It's not getting us anywhere.
One final fact before we leave, this Job's report also
tells us about wage growth. The important story for people
is what's going on with wages, relatives, prices. That determines
how much your living standards arising. Today, we've got the
wages part of the equation. We've got a little bit
of growth in wages. We haven't seen the prices data,
but we have a pretty good guess that they continue
to go up. So far over the last eighteen months,
wages and prices as of last month had risen an
exactly equal amount. My guess when we get the price
data is we're going to discover the price has got ahead,
which means that people's real wages on average have fallen
over the last eighteen months, and they've been falling fairly
sharply over the past six months. So if folks around
you are feeling miserable, I think those data will help
you understand that. Okay, big picture, we're not surging, we're
not sinking. We're treading water, and honestly, at times like this,
sometimes treading water might be all we can hope for.