In this special live edition of Glass Half Full, recorded at Carson Group’s Excell Conference in Denver, Ryan Detrick, Chief Market Strategist, and Sonu Varghese, Chief Macro Strategist, react to the freshly released September jobs report and ask: How is the labor market really doing?
Payrolls grew by just 29,000 in September, and July and August were revised down by about 60,000 jobs. Sonu explains why that is less alarming than it looks: With very low immigration, the economy needs only about 20,000 to 25,000 new jobs a month to keep up with population growth, and the payroll survey carries a margin of error of roughly 120,000 jobs. They highlight the metrics that matter more, including a historically low 4.2% unemployment rate and a prime-age employment-population ratio that rebounded to 80.7%, higher than anything seen in the 2000s or 2010s expansions. Ryan adds that software engineering job postings are up about 19% year over year, even amid AI fears, and that unemployment among younger workers has been trending lower all year.
They also cover why they think continuing jobless claims, down roughly 10% from last year, give the Fed less reason to worry about the labor market, why the focus will stay on inflation as gasoline, diesel, and food prices outpace paychecks, and why slowing wage growth eases pressure on the Fed to hike. They close with the stock market, which sits near all-time highs after a historic April and May rally, and explain why the recent consolidation could set the stage for a fourth-quarter sprint higher.
Key Takeaways
- Payrolls are a noisy gauge. The survey has a 95% confidence interval of roughly plus or minus 120,000 jobs, so we look to the unemployment rate, a historically low 4.2%, and the prime-age employment-population ratio, which rebounded to 80.7%, above any level of the 2000s and 2010s expansions.
- Other labor indicators are improving. Continuing jobless claims are down about 10% from last year, initial claims hover near 200,000 a week, software engineering job postings are up roughly 19% year over year, and younger-worker unemployment has trended lower all year.
- The Fed’s focus is likely to stay on inflation. Gasoline, diesel, and food prices are rising faster than paychecks, which weighs on consumer sentiment, while slowing wage growth eases some of the pressure on the Fed to hike.
- We remain optimistic on stocks. With the S&P 500 about 1% from an all-time high and the Nasdaq and Nasdaq 100 equal weight at record highs, we view the four months of consolidation after the April and May rally, when tech stocks gained roughly 40%, as a pause before a fourth-quarter push higher.
Jump to:
0:12 — Live From the Denver Conference
0:40 — September Jobs Surprise and Revisions
2:25 — The Metrics That Matter More
3:45 — Jobless Claims and the Fed Lens
5:20 — Inflation Pressure and Market Optimism
6:29 — Quick Wrap from Colorado
Connect with Ryan:
- LinkedIn: Ryan Detrick
- X: @ryandetrick
Connect with Sonu:
- LinkedIn: Sonu Varghese
- X: @sonusvarghese
The views stated in this podcast are not necessarily the opinion of Cetera Wealth Services, LLC, or CWM, LLC. and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Ryan Detrick and Sonu Varghese are non-registered associates of Cetera Wealth Services LLC.
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