Jobs just tripled expectations. Don’t celebrate yet.
It’s Monday — which means we’re doing this again.
Three Things Monday — three things worth knowing — in money, markets, and the economy — as you start the week.
If you were here last week, welcome back.
If you’re new, you picked a great day to start.
Let’s begin!
March Jobs Report TRIPLES Expectations — But Don’t Get Too Excited
On Friday, the Bureau of Labor Statistics released its monthly jobs report, and WOWZA.
The March job numbers blew everyone away.
Analysts expected we would gain around 60,000 new jobs in March. In reality, we gained 178,000 new jobs.
That’s triple expectations (for those of us who aren’t math majors).
But don’t pop the champagne cork just yet.
First, these job numbers get revised three times: after one month, after two months, and then annually. That’s a standard part of the process. Time will tell whether or not this data will survive the revisions.
Second, this data is an outlier as compared to March data from other sources, including the private payroll processor ADP (which estimates around 60k jobs), the BLS’s own JOLTS data (which looks at job openings and labor turnover, and which painted a picture of a low-hire, low-fire environment in February, the most recent month for which it has reported), and data from Challenger, Gray, and Christmas (yes, that’s actually their name), which reports on job cuts, and which released data for March that also showed a moderate level of firings.
My gosh, that was a run-on sentence.
But anyway — given the ADP/JOLTS/ChallengerGrey data — all of which told a consistent story of “low-hire, low-fire” — I think we need to take the BLS data in stride.
The point:
Are jobs increasing? Maybe.
But it’s more likely that the broader trend of “low-hire, low-fire” continues, given the rest of the data set.
If you’d like a deeper dive:
I released a podcast episode on Friday in which I repeated the phrase “cautious optimism” an accidentally comical number of times.
In fact, I highly recommend that you don’t play a drinking game in which you take a shot every time I say “cautious optimism,” because if you did, you would be passed out on the floor within 25 minutes.
Yuuupp, definitely don’t try that.
Renters Gonna Rent
Okay, but let’s take the BLS report at face value (as a hypothetical thought exercise).
What would this mean for the housing market?
Not much, according to a statement that Zillow released earlier today.
The economists at Zillow pointed out that even if we had tremendous job growth in the month of March, the last several months of data has shown volatility in the labor market. And when there’s a ton of volatility, people tend not to sign up for 30-year mortgages.
“Taken together, those revisions reinforce a pattern of higher month-to-month volatility without much underlying momentum,” wrote Zillow in its monthly economic assessment.
“… housing activity depends on more than mortgage rates alone,” they wrote. “Households make decisions about buying, selling and moving based on confidence in their job security, income growth and overall financial position. When payroll growth is choppy, revisions are negative, and labor-force attachment is weakening, many households choose to wait.
“That caution matters especially for renters, potential first-time buyers, and payment-sensitive movers, who are the most exposed to softer hiring and rising uncertainty,” they said.
Translation:
If you’re not confident that you’re gonna have a job, you’re probably going to keep renting for a few more years.
This means three things for the housing market:
(1) fewer buyers, which means less competition for home ownership, which makes it a great time to be a buyer.
(2) fewer buyers, which means less competition for home ownership, which makes it a sucky time to be a seller.
(3) more households renting/fewer households owning, which means increased rental demand, creating upward pressure on rental prices. This makes it a great time to be a landlord, but a worse time to be a renter (due to more competition with other renters).
In summary, in aggregate:
— Bad time to be a home seller
— Bad time to be a renter
— Great time to be a home buyer
— Great time to be a landlord
Obviously, every real estate market is local, so these are just broad statements about the overall national market. There are going to be massive differences depending on neighborhood, city, state.
The market in Wichita, Kansas is nothing like the market in San Diego, to state the obvious.
And ultimately, what matters to YOU is the specific market where you’re trying to buy, regardless of whether that’s where you live, or whether that’s a thousand miles away where you invest.
Live from Texarkana!
I’m writing this from Texarkana, Texas, where tomorrow night I’ll be recording LIVE on stage at Texas A&M Texarkana!
I’m crashing in the guest room of former financial planner Joe Saul-Sehy, who joins me on the Q&A episodes of the podcast (which airs every Tuesday-ish).
Starting tonight, I’ll be photodumping into my Instagram stories, but those pics are only available for 24 hours. If you want to see Joe use a flamethrower to start a fire (yes, seriously), make sure to follow the adventure on IG.
And if you happen to be anywhere near the Texas-Arkansas state line, come join us tomorrow night!
Where: Texas A&M Texarkana – Eagle Hall
When: Tuesday, April 7, 6:30 PM (Doors open 6:15)
What: LIVE podcast recording!
That’s the end of the second edition of Three Things Monday.
Please hit reply and tell me what’s on your mind right now. Markets? Housing? Your own budget? Student Loans? Retirement? Something weird you keep hearing about but don’t fully understand?
I’ll be back next week with three more updates. See you then!
