The hidden good news in the stock market and jobs report

Lurin / iStock via Getty Images

By Gary Alexandre

Don’t let Week 1 of 2022 confuse you. The S&P 500 fell 1.87%, the NASDAQ collapsed 4.53% and Friday’s jobs report came in a disappointing +199,000 net jobs in December from an expected gain of 422 000 jobs.

What happened? Are we finally in a lean year? First, let’s talk about the stock market downturn over the past week.

We obtain short-sighted measurement contracts by the week or by the month, or even by the year. At the end of the year, Ed Yardeni compiled the performance of the major market regions of the world – both in local currencies and in US dollars – since the birth of the last major bull market on March 9, 2009 (until the end of 2021), and the United States is way forward:

Performance of major market regions around the world, in local currencies and US dollars

Performance of the main market regions

Yardeni Research, using MSCI indices

MSCI stock price indices during the bull market from 2009

MSCI stock price indices during the 2009- bull market?

MSCI

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

The main sectors of the S&P 500 since 2009 are Focused on growth: Information technology (+1 430.6%) and consumer discretionary (+1 182.2%), while energy is clearly lagging behind, up just 36% in 13 years. In 2021 alone, the big loser was China (-22.7%), the CCP having recently become totalitarian.

Even the Federal Reserve claims that the US economy is “really strong” and “consumer demand is very strong” and “incomes are very strong”, which brings us to the mystery of the weak employment report. last Friday.

The good news hidden in last week’s employment data

Even though the United States created less than half of the expected jobs in December, a few much more positive numbers were released earlier in the week – more strained numbers that paint a more complete picture of the labor market. The first issue came out last Tuesday, and it seemed to answer one of my 10 predictions that came out in my column here that morning, January 4th: Prediction # 3: “Most of these ‘missing’ American workers will return to work. After taking advantage of too long and generous stimulus and relief payments, most of the workers now “on strike” will return to work. How quickly this happened.

On Tuesday, January 4, the Department of Labor announced that the number of job openings in the United States decreases by nearly half a million, from 11.033 million revised upwards on October 31 to 10.562 million on November 30. This is well below the expected GAIN of 11.075 million job offers.

As these charts show, unfilled vacancies have surpassed a record 10 million since last June:

Total number of non-agricultural vacancies

Total number of non-agricultural job vacancies

Saint-Louis FRED

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

Job offers in thousands

Job offers in thousands

Economics of Commerce, United States Bureau of Labor Statistics

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

The second piece of good news came out last Wednesday, when ADP’s payroll report indicated that private payrolls had increased by 807,000 in December! That’s more than four times Friday’s payroll report. One of the reasons for this discrepancy is that ADP has real-time data and Friday’s BLS report is preliminary. In good times, the totals are generally revised upwards. For example, there were upward revisions of 102,000 jobs for October, bringing the total to 648,000, and November added 39,000 jobs to 249,000. totaled at least 6.45 million, by far the best year of the 1940s war effort.

Here is a third piece of good news. The unemployment rate only counts those looking for work, but a more aggregate measure of unemployment – which includes discouraged workers and those in part-time jobs for economic reasons – has fallen to 7.3 % in December, against 7.7%, a huge positive drop.

As I mentioned last month, much of this return to work is out of necessity. Covid and its aftermath have brought us record levels of savings, government grants and stimulus checks, which are now depleted, and therefore, work income is needed again. Asset gains in homes, stocks and bitcoin are also stalled.

Many Americans have decided that working from home is right for them. Other millions of older Americans have decided retirement is right for them. Others have just quit the mad rush and learned how to open their own business in cooperation with extended family or friends in the inner suburbs. This resulted in record abandonments. The same report (last Tuesday) that unfilled jobs fell by nearly 500,000 also said a record 4.5 million people left their jobs in November, most of them looking for a job. higher salary.

This brings us to some sobering demographic truths: We are getting older – and we are more isolated.

We are getting older (and more isolated)

I am not a baby boomer. My wife and I were born during WWII, which technically makes us part of “The Silent Generation” (I know, I can hear you say, “So shut up, already”). Baby boomers, born between 1946 and 1964, are on average 66 years old. Most are retired. I still work and have worked since 1959, first on a paper route (by bike, then by car), then I went to university as a night porter, then a writer.

My fiancee and I got married 54 years ago this week (Jan 14, 1968) on Super Bowl Sunday 2, and I didn’t even know there was a game going on. Times have changed in this regard – and in many others.

Median age (in years) at first marriage

Median age at first marriage

Current demographic reports

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

As this graph shows, we were “normal”, 23 years old at the time of marriage. This is not the case with our descendants, who marry later and have children much later, if at all. As I have shown recently, this resulted in zero net population growth in 2021 for the first time since the Civil War, although such records were not kept annually at the time.

Live births and deaths in United States, in millions

Live births and deaths in United States (millions, 12 month sum)

United States National Center for Health Statistics, United States Vital Statistics, and National Vital Statistics Report

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

Due to the decrease in the number of children over the years, our median population is aging. We’ve gained about a decade in median age since the year we were married, when the median was 28. Now the median is 38 years. Births have been on a declining trend since 2008, when they peaked at a record 4.33 million.

Even before COVID hit, the U.S. Total Fertility Index (TFR), the number of births per woman per life, was 1.71, nearly 20% below the replacement rate of 2.1 needed for the population stability. The decade 2010-19 was the second smallest population increase in US history, slightly above the 1930s.

Median age of the population in the United States, in years

Median age of the population in the United States

United Nations and Haver Analytics

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

In 2020, the US TFR has slipped to 1.64, and it will be below 1.6 when 2021 is calculated. This puts us in a league with the 27 nations of the European Union (1.53) and Russia (1.50), but not quite in the slow rattle we see in Japan (1.36) and now even in China (1.30). The global “Population Bomb” is a failure.

Japan

Population of Japan, 1980-2040 | Total population of China

“New geography” (2017) | New York Times, “China’s Looming Crisis” (2020)

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

We also have fewer babies because more have chosen to be single and many choose to live single to old age, so we become more and more isolated and households get smaller and smaller over the years.

Enumeration of the single population aged 16 and over, including never married, divorced, separated and widowed

Population by marital status: single (16 years and over)

Bureau of Labor Statistics

Graphics are for illustration and discussion purposes only. Please read the important information at the end of this commentary.

Essentially, we have to deal with these demographic and financial realities if we are to fill these 10 million vacant positions. That probably means accepting skilled immigrants, raising wages, and having more children.

All of the above content represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Warning: Please click here for important information located in the “About” section of the Navellier & Associates profile accompanying this article.

Disclosure: * Navellier may hold securities in one or more investment strategies offered to its clients.

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Editor’s Note: The bullet points for this article were chosen by the editors of Seeking Alpha.

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