Kelly Evans: The jobs market "recalibrates"
But let's also not pretend that all is well right now. From the "deep malaise" in big tech, where Microsoft is laying off another 9,000 employees, to the downturn in hiring of new college grads, some things in the labor market are clearly amiss.
The number of "discouraged workers" soared by a quarter-million last month, the Labor Department noted in its report today. The number of job cuts in the first half of the year was the highest since Covid, according to Challenger Grey. ADP reported flat-out job in the private sector last month, we learned yesterday.
So what gives? "I think this is a 'recalibration,' more than a recession," Evan Sohn, the CEO of workforce intelligence company Aura, told us. The DOGE cuts, tariffs, economic uncertainty, and the growing deployment of AI are all factors that he, Challenger, and others have cited for the labor market's turmoil lately.
That's exactly how Michael Kantrowitz, the chief investment strategist at Piper Sandler, sees things, too. Even if jobs growth goes he wouldn't take that as a knee-jerk indicator of an economic slowdown, he told us yesterday. There are just too many structural changes going on in the labor force right now.
And in fact, a weaker labor market should prod the Federal Reserve to lower interest rates sooner--which could boost the economy and the markets if no real slowdown is taking place. In other words, we are in a sort of "win-win" situation right now, where slower job growth means Fed cuts that could lift stocks, but faster job growth--as we saw this morning--means a resilient economy that should also support stocks.
Which is how you get a market that has not just recouped its deep losses from earlier this year, but is now making new highs day after day. We'll see if that changes after the potential snapback of all of those "reciprocal" tariffs next Wednesday.
See you on Monday, and Happy Fourth!
Kelly
Twitter: @KellyCNBC
Instagram: @realkellyevans
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