Disappointment on the employment front, but still not recessionary

Although we had a second consecutive monthly decline in nonfarm payroll employment, both declines were too small to be considered any more than "flat." Yes, they were disappointing, but they still are not deep enough and wide enough to be clear indicators of recession. In fact, the unemployment rate actually declined, which is not what you expect to see in a "deepening recession." Sure, part of the dip was due to people leaving the workforce, but the simple fact is that in a recession the unemployment rate rises due to significant layoffs and we simply are not yet seeing significant layoffs.

The second piece of good news in the employment report was that average hourly earning rose 0.3% over the month, which is quite respectable. Average weekly earnings increased by about the same rate, also quite respectable, especially for a so-called "recession."

The other good news this week was that the weekly unemployment initial claims declined and the four-week moving average of initial claims declined as well. If we really were in a recession or a "deepening recession" we would not be seeing this kind of moderation.

In short, as disappointing as the employment report was, the news was not anywhere near as bad as so much of the commentary and hand-wringing suggested.

Sure, maybe we will still have a recession, but the data this week says that we are not there yet.

-- Jack Krupansky