A quick survey of the US economy
It’s been ten years since the last recession in the United States so maybe that’s the reason there’s so much speculation about the next one. But at this point there’s no sign of one in the numbers—especially those concerning jobs and consumer spending.
Our focus is the job market and consumers. If Americans have jobs they spend money and since that accounts for 70% of the US economy that’s mostly what we need to understand.
First, 104 consecutive months of job growth—that’s never happened before.
We think the best indicator of the job market is revealed in the number of workers willing to quit their jobs. People don’t quit unless they are confident of getting a better job. Meanwhile layoffs remain low.
And an increasing number of quits is reflected in high consumer confidence. The next chart shows how quits and confidence track each other.
The unemployment rate is the lowest since 1969. 1969!
Below is the most surprising chart. For the first time in history there are more job openings than unemployed people in the US. Businesses continue to report difficulty in filling job openings. This is very good news for low skilled workers.
All this job market strength translates into strong retail sales. Ignore the monthly headline numbers, year over year growth in retail has stayed above 3% for many years—a strong number. Most of the growth is in online purchases.
Strong retail sales are supported by growth in personal incomes—new record highs.
And consumers aren’t spending everything they make. The savings rate is healthy (so it doesn’t make headlines) and the absolute amounts saved each year have reached $1 trillion. A big shift since the 2008 financial crisis.
Someday there will be another recession, but these are not the kind of numbers we see as we head into one. We will not bet against the US consumer.
Daniel A. Ogden