The number I’m watching in tomorrow’s BLS report is average hourly earnings growth. Projection for April 3.5% year over year growth.. That would match the March 2026 reading of 3.5% YoY. Which would bee enough to keep highest income families above inflation hit. But probably not enough to keep lowest half ny income of the workforce from losing ground to higher gasoline and other energy costs.
Whirlpool reported "recession-level industry decline" during earnings today. Revenue down 10% this quarter and a $82 million loss. They hiked prices 10% in April, and will hike another 4% in July.
Several quick service restaurant chains have also reported shifting purchasing patterns consistent with consumer distress — another canary in the coal mine.
Not sure how this fits into your frame of stability in the labor market but please allow me to add:
The latest JOLTS report showed the labor market still in slack mode with the ratio of the number of unemployed to job openings above 100%, although there was a decline from a 109% handle to a 105% handle. Seems like that should be favorable?
What worries me is that there is too much discretionary money in the Top 10%.
The Top 10% accounts for 50% of spending on goods and services, in an economy 2/3rds of which runs on consumption of goods and services.
The Top 10% owns 95% of the stock market.
Let’s say there is a significant drop in the Magnificent Seven stocks. If past history is any indication, the demographic that owns 95% of the stock market will cut back discretionary spending. Let’s say the Top 10% cuts back its discretionary spending just 10%.
10% of 50% of discretionary spending represents a not-insignificant drop of 5% of consumer spending. So, consumer spending’s 2/3rds of the economy drops from 66% to 60% — a reduction of 6% of overall consumer spending. You can imagine the knock-on effect, trigger for a recession?
This is the constant risk for an economy with too much wealth (discretionary spending) concentrated in only 10% of its people.
In the interim, the Top 10% can afford gasoline prices. But if and when people see their net worth drop, human nature kicks in . . .
After the jobs numbers this morning, I went back and re-read the "Trust in Numbers" post from February. Dr. Sahm highlighted problems caused by the declining response rate in the BLS Household Survey -- the survey where we find the unemployment rate. Household survey shows labor force down by over one million in past year and employment down by almost 1.3 million in past year and worse than -200,000 down just in month of April 2026. So, household survey not consistent with picture from payroll survey. Tough job for Fed or anyone else trying to sort this all out.
interested to hear your own views around the use of QE when rates are not at the lower bound and its role in distorting incentives for governments to spend
aside - this new normal of the job market is not ok: impossible for grads and people who have lost jobs to find a job!! yet again the haves and the have nots...distributional problems are rising and pose systemic risk. watch this space.
When looking at wage growth, percentage gain is one measure, actual gain also gives context. A 4 percent gain for a $15 per hour job is an additional 60 cents an hour. A 2 percent increase for a $40 per hour job is 80 cents an hour. Sure, the gap has infinitesimally closed… for a year, but the dollars and cents increase was still larger at higher wage jobs.
The reversal you're describing in the wage buffer is worth naming structurally. During 2021-22, the tight labor market created a temporary alignment between low-wage growth and essential cost exposure — not by fixing the underlying structural gap, but by compressing it enough to matter in the short run. What the current data shows is that the compression was cyclical, not structural. As the labor market softened, the buffer disappeared, and low-wage workers are now entering an energy shock in the same structurally exposed position they were in before the pandemic tightened things up. The households most vulnerable to essential cost spikes are also the ones whose wages are least anchored to anything that would move with those costs. That asymmetry — where the downside risk is structurally locked in but the upside is only available at peak labor market conditions — is the design problem underneath the cyclical story.
Is Warsh not saying," The fed's role is first and foremost price stability. The unemployment rate, I have to admit is in the statute so I have to be for it, but here is what that means. Full employment isn't about a number. It's about making sure white American men are adequately employed. Therefore, my dual mandate is white male employment and price stability"? This explains his imbalance in putting so much more importance on price stability, and so little on the unemployment rate which measures the lack of employment for all Americans which is heavily waited to minorities.
The number I’m watching in tomorrow’s BLS report is average hourly earnings growth. Projection for April 3.5% year over year growth.. That would match the March 2026 reading of 3.5% YoY. Which would bee enough to keep highest income families above inflation hit. But probably not enough to keep lowest half ny income of the workforce from losing ground to higher gasoline and other energy costs.
I'm waiting for energy prices to cause the inevitable durable goods pullback shoe to drop.
Whirlpool reported "recession-level industry decline" during earnings today. Revenue down 10% this quarter and a $82 million loss. They hiked prices 10% in April, and will hike another 4% in July.
Is that not the opening shot?
Looks like it to me, but I'm no expert. Does something I've overlooked somehow overwhelm a consumer pullback?
Several quick service restaurant chains have also reported shifting purchasing patterns consistent with consumer distress — another canary in the coal mine.
Always insightful, Dr Sahm.
I had to read it twice 😊
Not sure how this fits into your frame of stability in the labor market but please allow me to add:
The latest JOLTS report showed the labor market still in slack mode with the ratio of the number of unemployed to job openings above 100%, although there was a decline from a 109% handle to a 105% handle. Seems like that should be favorable?
What worries me is that there is too much discretionary money in the Top 10%.
The Top 10% accounts for 50% of spending on goods and services, in an economy 2/3rds of which runs on consumption of goods and services.
The Top 10% owns 95% of the stock market.
Let’s say there is a significant drop in the Magnificent Seven stocks. If past history is any indication, the demographic that owns 95% of the stock market will cut back discretionary spending. Let’s say the Top 10% cuts back its discretionary spending just 10%.
10% of 50% of discretionary spending represents a not-insignificant drop of 5% of consumer spending. So, consumer spending’s 2/3rds of the economy drops from 66% to 60% — a reduction of 6% of overall consumer spending. You can imagine the knock-on effect, trigger for a recession?
This is the constant risk for an economy with too much wealth (discretionary spending) concentrated in only 10% of its people.
In the interim, the Top 10% can afford gasoline prices. But if and when people see their net worth drop, human nature kicks in . . .
Time will tell.
JVG
https://www.a16z.news/p/charts-of-the-week-the-fastest-v?utm_campaign=post&utm_medium=web
After the jobs numbers this morning, I went back and re-read the "Trust in Numbers" post from February. Dr. Sahm highlighted problems caused by the declining response rate in the BLS Household Survey -- the survey where we find the unemployment rate. Household survey shows labor force down by over one million in past year and employment down by almost 1.3 million in past year and worse than -200,000 down just in month of April 2026. So, household survey not consistent with picture from payroll survey. Tough job for Fed or anyone else trying to sort this all out.
thank you claudia
interested to hear your own views around the use of QE when rates are not at the lower bound and its role in distorting incentives for governments to spend
aside - this new normal of the job market is not ok: impossible for grads and people who have lost jobs to find a job!! yet again the haves and the have nots...distributional problems are rising and pose systemic risk. watch this space.
When looking at wage growth, percentage gain is one measure, actual gain also gives context. A 4 percent gain for a $15 per hour job is an additional 60 cents an hour. A 2 percent increase for a $40 per hour job is 80 cents an hour. Sure, the gap has infinitesimally closed… for a year, but the dollars and cents increase was still larger at higher wage jobs.
The reversal you're describing in the wage buffer is worth naming structurally. During 2021-22, the tight labor market created a temporary alignment between low-wage growth and essential cost exposure — not by fixing the underlying structural gap, but by compressing it enough to matter in the short run. What the current data shows is that the compression was cyclical, not structural. As the labor market softened, the buffer disappeared, and low-wage workers are now entering an energy shock in the same structurally exposed position they were in before the pandemic tightened things up. The households most vulnerable to essential cost spikes are also the ones whose wages are least anchored to anything that would move with those costs. That asymmetry — where the downside risk is structurally locked in but the upside is only available at peak labor market conditions — is the design problem underneath the cyclical story.
Is Warsh not saying," The fed's role is first and foremost price stability. The unemployment rate, I have to admit is in the statute so I have to be for it, but here is what that means. Full employment isn't about a number. It's about making sure white American men are adequately employed. Therefore, my dual mandate is white male employment and price stability"? This explains his imbalance in putting so much more importance on price stability, and so little on the unemployment rate which measures the lack of employment for all Americans which is heavily waited to minorities.
“Stable” in a bad situation isn’t “good.”
To date, the avg tax refund is more than compensating for the average increase in spending on higher gasoline price.
This is interesting and Claudia does an excellent job .
Yet for stock investors the only thing that matters is the Mag 7 or 10 or whatever .
MU is up 700%
Seagate up600%
InTC up 500%
It is 1999 ..we even have our own QCOM up 26X your money in 1999
This past year SanDisk is up 30X your money .
I mean ,I care about our economy..but that can wait while just buying SPY is making me rich
5 stocks have been responsible for 50% of the rise in SPY since April 1 .
First hubris, then nemesis …
Kevin Warsh seems to have made his position pretty clear - confirmation hearing circumlocution notwithstanding.