The Labor Market, Operating Margins, Excess Savings
September 8, 2023 | FIRESIDE CHARTS
Job growth continued in August, but the unemployment rate unexpectedly ticked up as the labor force increased. Employment remains strong, but the gains are slowing and new entrants to the labor force aren’t finding jobs as quickly. Larger companies command a valuation premium in the market, but it may be well deserved. Student loan payments have resumed. Euro area consumers aren’t displaying the same confidence as American consumers. The rise in interest rates has punished conservative investors.
1. A rising unemployment rate is a sign of a slowing labor market, even though employment is still growing:
Source: The Daily Shot 9/5/2023
2. The prime age employment rate had plateaued:
Source: Bureau of Labor Statistics, Employ America
3. For more information on the minutia of the recent jobs report, Employ America wrote an interesting blog post “Labor Force Participation and Unemployment are Tricky. Employment is What Matters.”
Source: Council of Economic Advisors, Employ America
4. Larger companies have higher operating margins, on average, than smaller ones. Notably, operating margins no longer look elevated among companies of all sizes:
Source: PGM Global
5. The first loan payments aren’t due until October, but borrowers are making large payments before interest accrual begins:
Source: Goldman Sachs; @MikeZaccardi
6. U.S. consumers accumulated more excess savings than their European counterparts and are spending it much faster too:
Source: MRB Partners
7. The divergence between the stock and bond markets is truly unprecedented:
Source: Alpine Macro
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.