Editor's Note: Below is a brief excerpt and chart from today's Early Look which was written by Hedgeye U.S. Macro Analyst Christian Drake. If you're interested in staying a step ahead of consensus, we encourage and invite you to subscribe.
- RoC | Past Peak: From a rate of change perspective NFP peaked in February at +2.343% YoY. Re-breaching that growth rate to the upside is not going to happen. It’s just math meeting realism. The M/M change in NFP would have to be +602K for that to happen. What does that mean? Not much in the very immediate-term, at least based on historical precedent. As the Chart of the Day below illustrates, payrolls run into the law of large numbers as an expansion matures with peak rate-of-change in NFP occurring ~2yrs ahead of the peak in the cycle. Cycles take time to play out – let it breathe. And, as noted above, typical business cycle oscillations in the post-war period are only loose analogs for the post-crisis expansion.