Dante DeAntonio, Senior Director of Economic Research at Moody's Analytics, joins the hosts to analyze the latest job reports and economic indicators. They discuss the challenges in the U.S. labor market, from federal employee leave impacts to rising unemployment claims. The conversation highlights troubling trends in layoffs, particularly in tech, and explores the implications of tariff policies on consumer confidence. They provide insights on recession probabilities while painting a vivid picture of the economy as a 'thorny wilting rose,' with mixed signals and uncertainties ahead.
The April jobs report showed a job growth of 177,000, but revisions suggest a potentially cooling labor market.
Wage growth deceleration to 0.2% highlights challenges in a slowing economy, reflecting uncertainties in employment stability.
Consumer confidence has sharply declined, raising concerns about financial security and increasing the risk of an economic downturn.
Deep dives
Trends in Employment Data
The employment report for April revealed job growth of 177,000, which aligns with recent months' trends. However, the data is perceived as potentially misleading due to its reference week occurring early in the month, not accounting for later developments, including tariff news. Specific sectors like healthcare and leisure continued to show growth, with transportation and warehousing also experiencing notable increases due to pre-tariff spike imports. Despite this, revisions from previous months indicated overall job growth may not be as strong as it appears, with downward adjustments suggesting a cooling labor market.
Concerns About Wage Growth
Wage growth in April decelerated to 0.2%, maintaining a year-over-year increase of 3.8%, still hovering around the 4% mark achieved over the past two years. The implications of this stagnation raise questions as to the vitality of wage growth in a slowing economy, particularly given the recent warning signs from other economic indicators. Additionally, declines in manufacturing hours worked indicate potential downturns ahead, hinting at weaker demand, particularly in light of the ongoing trade war's impact. As layoffs rise in sectors such as transportation and warehousing, the stability of wage trends becomes even more critical.
Rising Unemployment Claims
Unemployment insurance claims rose to 241,000, a significant jump suggesting a slight increase in layoffs, although still deemed within manageable levels. The elevated continuing claims signal growing difficulty for individuals finding new employment after losing jobs, indicating stress in the labor market. Notably, the rise in initial claims was particularly evident in states in the Northeast, suggesting regional pressures which could hint at broader economic trends. While these indicators may not forecast an imminent crisis, they warrant close monitoring as they reflect a shift in labor market dynamics.
GDP and Economic Growth Outlook
The GDP report indicated a decline of 0.3% for the first quarter, marking the first contraction since 2022, primarily driven by a surge in imports ahead of tariff increases. Despite a notable rise in business investment by over 20%, overall domestic demand was not robust enough to offset the negative impact of the trade environment. The report underscores uncertainty within the economy, exacerbated by trade tensions, as businesses adjust to new market conditions. Looking forward, expectations remain muted for future growth, with revisions potentially revealing further softness in the GDP figures.
Consumer Confidence Concerns
The Conference Board's survey indicated a sharp decline in consumer confidence, falling dangerously close to historical thresholds that signal impending recession. This prolonged downward trend illustrates growing anxiety among consumers regarding their financial security amid the evolving economic landscape. The index's drop reflects dwindling trust in job stability and a cautious stance toward spending, both critical components for economic momentum. With confidence waning, the risk of an economic downturn appears to be increasing unless significant improvements in trade policies and job stability are realized.
Moody’s Analytics colleague Dante DeAntonio joins the podcast to recap the April jobs report, along with the potpourri of other economic data released this week. Marisa dives into other labor market data, Cris tackles GDP, and Mark discusses consumer confidence. All along the way, Mark points out the thorns in recent data. The team also provides an update on their recession probabilities.
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Guest: Dante DeAntonio - Senior Director of Economic Research
Follow Mark Zandi on 'X', BlueSky or LinkedIn @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
Questions or Comments, please email us at helpeconomy@moodys.com. We would love to hear from you.
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