5.5% Unemployment Rate Represents Full Employment

3-5 Months Ahead of Fed Forecasts for Employment Levels

What has sort of gone under the radar recently with Ebola fear mongering, Europe throwing a tizzy fit until they get their ‘stimulus fix’ and everything is miraculously all well again, profit taking in front of earning`s season here in the US, and oil on one of its customary $20 trading range moves to the downside is that last Friday the unemployment rate dropped to 5.9% due to another robust employment report and several upward revisions to prior month`s reports. Yes we are in the 5`s for unemployment, well ahead of everyone`s forecasts including the Federal Reserve.  

Fed Minutes after Incorrect Employment Report

It is great that everyone interpreted that the Fed Minutes were dovish, but the mistake is that this was after a dismal employment report, these minutes were based on old and incorrect economic information, and a Data Dependent Fed has some explaining to do now that the new employment data has come out last week for the economy.

But What About…

I know this is where the doom and gloom crowd who look at every glass as half full will point to the number of people who have left the workforce, or the underutilization rate, or the quality of jobs created in the economy, or wages only being up 2% this year, or these jobs aren`t cosmic fulfilling to their ethos spirit. 

Have You Seen The Jolts Chart?

My response to that criticism is the following data set from JOLTS data released this week showing there were 4.835 million job openings out there for all those who have either not been looking very hard for a job, have left the workforce, are not satisfied with their current job, or are seeking additional training to move into the workforce. This was the highest level of job openings since January 2001. The number of job openings increased for total private and was little changed for government in August. This is good for the economy the strength that we have seen in both the Employment numbers and JOLTS data the fact that the private sector is leading the way, and not burdensome non-market related government jobs which frankly act as a negative in my book considering their performance and compensation disconnect.