US jobs and wages
US jobs data was a little amazing given “everything” (i.e., tariffs, wars, deportations, energy shock, rates) that’s going on. 115K new jobs in the month, looking quite reasonable against a 0-30K BE (breakeven) rate. Wages growth also looking much more benign (not too hot). EPOP (employment-population ratio) at ~highs, JOLTS (job openings data) stabilising…all over quite good.
A great many of our client conversations are about inflation, and I suppose the below graph (which comes to us via Stephen Kirchner in turn via Scott Sumner) is some comfort there, in that wages (a proxy for nominal wages arrived at by taking average hourly earnings, * hours worked * total employed) is cooling. But the relationship to nominal GDP means it is about to reaccelerate, but as Stephen reminds us the US is now producing a lot of our put via capital inputs (think data centers/AI etc) and so we wouldn’t necessarily expect that.
So to the degree that you think inflation comes from wages (a cost) pushing prices higher, this is good news.
So it probably means we don’t need to sell all our international bonds just yet.
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