‘Concerns About A Stronger-Than-Expected Economy’ Is A Real CNN Thing We Just Read by Rebecca Schoenkopf
Oh no everybody’s got jobs. This is terrible news for stonks! Read on Substack
Now that Yr Wonkette is doing thinky pieces instead of trying to keep up with every last bit of news, we won’t feel obligated to bring you every monthly jobs report, but golly, this story from CNN sure is a ride. Looka this headline: “Stocks tumble following blowout jobs report.”
We are informed that US stocks “plunged” Friday in response to a much better-than-expected jobs report for December, showing that the economy added 256,000 jobs, way more than the 153,000 jobs that Wall Street economists predicted. Investors were reportedly worried that meant that the Federal Reserve will be too nervous about possible inflation to make more interest rate cuts anytime soon:
The Dow dropped by 697 points, closing at 41,938, while the S&P 500 fell by 1.5% and the tech-heavy Nasdaq index was lower by 1.6%.
The three indices all finished the week in the red as Friday’s selloff erased the week’s previous gains.
That’s one way to report the strong job growth, which was accompanied by a drop in the unemployment rate to 4.1 percent.
Or the numbers could also be reported with headlines like these, from ABC News and NBC News, respectively:
Oh yes, and on a completely separate story that was only about the jobs report itself, CNN Business ran the hed “Job growth skyrocketed in December, boosting one of the strongest labor markets in US history.” Huh!
You know, just in case you needed a reminder that the stock market is not the economy, the stock market is not the economy, and did we also mention that the stock market is not the economy?
The CNN stock market story went on to explain,
Traders now expect just a 2.7% chance the Fed will cut rates at its policy meeting later this month, according to the CME FedWatch Tool.
The Russell 2000 index, which tracks smaller companies, fell 2.2%, highlighting concerns about the impact of “higher for longer” interest rates.
And yes, it’s quite true that higher interest rates can be a drag on the economy, which is how the Fed deploys them, sometimes too aggressively, to keep inflation in check.
The story also noted that returns on 10-year Treasury notes,
spiked to 4.76% and the yield on the 30-year US treasury rose to 4.95%.
Rising yields signal concern about a stronger-than-expected economy, resurgent inflation and potentially fewer rate cuts in 2025 than anticipated.
Let’s just repeat that: “concern about a stronger-than-expected economy.” In other words, the strong economy that Joe Biden is handing off to Donald Trump as he leaves office is primarily a concern for big investors, not necessarily the rest of us proles out there.
The contrast in perceptions was evident even in the video attached to the CNN stocks story, which focuses more on the jobs numbers than on stocks. Reporter Matt Eagan was almost giddy, saying, “This is really good news for Main Street, right? It shows that workers are still very much in demand.” Eventually he did get to the response on Wall Street, but before that, Egan pointed out that yet again, workers’ buying power increased because wage growth outpaced inflation, yay.
In fact, let’s hit that one in detail. We’ll crib from Simon Rosenberg’s Hopium Chronicles, because that’s a kickass name for a blog:
Unemployment rate at 4.1%, widely considered to be “full employment.” Wages have risen 3.9% over the past 12 months, outpacing the inflation rate 2.8% during this period.
Rosenberg also helpfully reminds us that net job creation under Biden — 16.6 million jobs — is far greater than under the last three Republican presidents (Trump and both Bushes) combined, a piddling 1.9 million. Yes, yes, that includes the pandemic shock for Trump and the recovery of those jobs under both Trump and Biden — some nine million of ‘em lost and regained all told; roughly half of the bounceback occurred under Trump in the second half of 2020. But the pandemic job losses were all restored by June 2022, far earlier than most economists predicted, meaning that Biden’s economy has added around 6.8 million jobs since regaining the pandemic losses.
On the whole, the economy in 2024 added 2.2 million jobs, returning to something like the pre-pandemic job growth rate, and — we’re gonna say it again — reaching a “soft landing” from the high inflation that hit every industrialized country in the world following the pandemic and its disruption of supply chains. Joe Biden also pulled off something rarely seen in US history: Job gains in every single month of his presidency.
So congratulations, Mr. Trump. After cleaning up the mess made by the 2008 economic crash, Barack Obama handed you an economy that kept growing until the pandemic hit. Now Joe Biden, after getting things on track in the wake of the pandemic, will leave behind what just might be the best economy any incoming president has inherited.
Please try not to fuck it up too badly, Sir.
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