On Friday, the US Labor Department’s Bureau of Labor Statistics released its employment report for March. The jobs report is considered by many in the market as the most important indicator for gauging the temperature and determining the direction of the US economy.
The report shows, among other things, the number of non-agricultural jobs created last month, often referred to as the “most significant number of the month.” In March, 230,000 new jobs were created in the world’s largest economy, which was in line with expectations.
Earlier this winter, the reports were so strong and startled many economists that a recession was expected as a result of the sharp rise in interest rates. She described the January figures as “shocking” and “hard to believe”.
Olaf Chen, Head of Allocation and Global Interests at Storebrand, also follows the unemployment numbers closely. Last fall, Harald Magnus challenged Andreessen to a bet that the unemployment rate would be no more than 4.1 percent by June 2023. At the time, unemployment was 3.5 percent.
In March, the unemployment rate fell to 3.5 percent, from 3.6 percent in February, according to the latest figures on Friday.
“A lot of strange and dramatic things would have to happen for me to lose that bet,” Chen says, adding that he has a similar bet against several people in the industry.
Chen believes the report will not show major changes, and expects unemployment to remain at current levels for some time. He sees little sign of weakness and indicates that interest rates are working with a certain period of time.
It is difficult to determine the exact date of contraction. I’ve been saying that at least there won’t be a recession “for the next six to nine months” for some time now, and I can hardly say that anymore. But I think it will be closer to 2024, if the banking crisis doesn’t escalate or something else unexpected happens, Chen says.
Chen still thinks it will be ugly when the downturn comes first. He absolutely does not believe in a “soft landing” for the US economy, which would mean that price inflation would drop to the 2% target without increasing unemployment by more than one and a half percentage points.
What I’ve believed for a long time is that things have been going well for longer than a lot of people think, but when you first hit it, it hits exponentially increasing unemployment. It’s an inherent mechanism in recessions, and one that’s inherently self-reinforcing, he warns.
– Not Maaemo
Andreessen, chief economist at Sparebank 1 Markets, concedes that it looks bleak to him in terms of the bet.
– I have not received an offer, but I will sell that contract if I can do it above face value. The unemployment rate is unlikely to rise above 4.1 percent by June, but it could happen quickly. not hero Unimaginable, he says.
Andreessen is surprised by how much the US economy has improved. He still thinks deflation is coming.
– Housing construction fell sharply, but there was no decrease in employment in construction, which is really amazing. He says if it worked out, I might have won.
Andreessen is now clinging to several “positive” signs of labor market weakness. The number of job vacancies fell sharply last month, while the number of first-time applicants for unemployment benefits was revised down Thursday.
Andreessen also points to wage growth as the central bank’s main problem, and a weak labor market as the answer.
Wage growth is not sustainable if inflation is to fall to the target level. History shows unemployment has to go up, says Andreessen, that’s the unpleasant truth.
In the bet with Qin, there is not only honor and glory, but also a better dinner lies in the pot.
– We didn’t agree on the place, but it wouldn’t be Maaemo, Andreassen laughs.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.
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