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Jobs Growth Prospects Dim

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According to our research, the consumer is likely to become more wobbly than most expect.

ECRI’s is all about the timing of turning points. January 2019 saw the cyclical peak in jobs growth, and it is far from over. Both nonfarm payrolls and the household survey year-over-year growth are in cyclical downturns.

While there’s been lots of celebration about the supposedly strong jobs market, just because nonfarm job prints haven’t undershot consensus expectations, people are missing the forest for the trees, which the chart makes plain.

Nonfarm payroll growth is already at a 17-month low, and the household survey is even weaker. And we already know that the top nonfarm payroll line will be revised down by half a million jobs, when we get the benchmark revisions in a few months.

The key reason many people are betting on a soft-landing is the belief that the consumer will save the day, in large part because of solid jobs growth. Here’s the problem. Growth in ECRI’s Leading Employment Index, which correctly anticipated this downturn in jobs growth, is at its worst reading since the Great Recession.

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