Employment, Earthquakes, and the Eclipse

Episode Summary

Executive Summary: The panel dissects a very strong March 2024 jobs report, arguing that repeated upside surprises are now explainable by a much larger labor supply—especially immigration—rather than overheating. They conclude the labor market is near “picture perfect,” with solid payroll gains, stable unemployment, moderating wage growth, improving hours, and little evidence of recession risk. Attention then shifts to the Fed, which remains focused on inflation rather than jobs.

Main Topics: March 2024 jobs report was exceptionally strong (Priority: 5/5): The panel highlights broad-based payroll growth of 303,000, with no major industry losing jobs and gains concentrated in healthcare, leisure/hospitality, and government. They argue the report is more convincingly positive than prior months because several supporting indicators also improved. Immigration as the key explanation for labor-market strength (Priority: 5/5): A major theme is that elevated immigration—both documented and asylum-linked labor-force entrants—may be supplying enough workers to absorb strong job creation without pushing unemployment or wages sharply higher. The panel says this helps reconcile payroll and household survey discrepancies. Household survey vs. payroll survey disconnect (Priority: 4/5): The hosts discuss why household survey employment and labor-force gains have often lagged payroll gains, and why this month’s large labor-force increase only partly closes that gap. They note sample and response issues, plus possible undercounting of new immigrants. Indicators suggest a healthy, balanced labor market (Priority: 5/5): Average weekly hours recovered, average hourly earnings slowed to about 4.1% year over year, unemployment fell to 3.8%, and prime-age employment-to-population remained at 80.7%. The panel repeatedly describes the labor market as stable, not overheating. Fed and markets: jobs matter less than inflation now (Priority: 4/5): The group argues the Fed is effectively waiting for inflation data before deciding on rate cuts, likely in June if core CPI/PCE cools enough. Markets still slightly favor a June cut, with some expectation of three cuts this year. Other corroborating signals: manufacturing, construction, and layoffs (Priority: 3/5): They note improvement in ISM manufacturing (back above 50), construction strength, and a decline in layoff signals once government-related announcements are removed. These reinforce the view that the economy is resilient across sectors.

Key Arguments: Strong payroll growth is no longer surprising; 250k-300k monthly gains may now be sustainable given labor-supply expansion. The unemployment rate staying near 3.8%-3.9% suggests labor demand is being met by higher labor supply rather than creating inflationary pressure. Immigration plausibly explains why payroll gains are strong while household-survey measures appear weaker or inconsistent. Many immigrants may be legally employable while awaiting asylum proceedings, so they can appear in employer payroll data but not household surveys. Part-time employment is elevated at the household level, but involuntary part-time work is near an all-time low, so the rise is not necessarily a sign of weakness. The labor market is supporting growth without wage or price acceleration; wage growth around 4% is consistent with the Fed’s inflation goal plus productivity. The Fed is unlikely to change course on jobs data alone; inflation prints for March-May are the deciding factor for June. Manufacturing and construction are showing resilience despite high rates, contradicting expectations of a broad slowdown. Forecasts have been too low because analysts anchored to a pre-immigration labor-supply model that no longer fits current conditions.

Data Points: Payroll jobs added in March 2024: 303,000 - Headline gain in the BLS employment report Average monthly payroll gain in Q1 2024: 276,000 - First-quarter average job growth Approximate underlying monthly job growth estimate: ~250,000 - Panel’s revised estimate of trend job creation Unemployment rate: 3.8% - Ticked down from 3.9% after revisions Average hourly earnings growth (y/y): 4.1% - Lowest since the pandemic, moderating toward a slow landing Average weekly hours: Recovered / normalized - Hours improved after prior weakness; roughly back to year-ago levels Foreign-born civilian noninstitutional population change (past year): Almost +3 million - Household-survey breakdown cited as evidence of immigration-driven labor supply Native-born civilian noninstitutional population change (past year): Fell - Contrasts with foreign-born growth Prime-age employment-to-population ratio: 80.7% - Described as a strong full-employment indicator Share of employed persons working part-time: 17.7% - Highest since March 2018 in the household survey Involuntary part-time share of part-time work: ~15% - Near an all-time low, suggesting most part-time work is voluntary ISM manufacturing index: 50.3 - First reading above 50 after 16 months below the expansion threshold Challenger announced layoffs in March: 90,309 - Highest since January 2023, but distorted by government cuts Government-related Challenger cuts: 36,000 - Includes 10,000 VA and 24,000 Army cuts Annual average immigration in Census model: ~1 million per year - Official population-growth estimate cited by Marissa CBO implied immigration estimate: ~3 million per year - Used to explain stronger labor supply than Census counts Labor force gain in March household survey: Almost 500,000 - Supported the unemployment-rate decline and narrowed survey gap Part-time share context in labor force: 50.3? - This was actually Dante’s stats game ISM figure; included because it was discussed as a key data point elsewhere Layoff notices / WARN notices: Lower than last year - State-level notices were described as subdued and not a recession signal

Pivotal Quotes: "I think it might be closer to 250 at this point." — Dante DiAntonio: Revising the estimate of sustainable monthly job growth upward "It feels like the supply side of the labor market has kicked into higher gear here." — Mark Sandy: Explaining why 250k monthly job gains no longer imply overheating "The labor market is just picture-perfect about as good as, I mean, it is as good as it gets." — Mark Sandy: Summing up the panel’s view of the March jobs report

Implications: Listeners should expect the Fed to stay data-dependent on inflation, not jobs, and markets may keep pricing a June cut only if CPI/PCE cools. For the labor market, elevated immigration appears to allow faster job growth without overheating, but policy changes on immigration could alter that balance.