The U.S. economy continues to slow, despite what some people say. Investors will be watching Friday's jobs report as critical context about where the U.S. economy is headed. However, anyone following Wall Street consensus' guesses about how many jobs were added in October (the current forecast is 178,000), will miss the most important aspect of the report.
Jobs market growth is slowing. It has been since February 2015.
As you can see in the Chart of the Day below, current year-over-year jobs growth is 1.7%, down from the peak of 2.3% in February 2015. Note: Once jobs growth peaks, it converges to zero 100% of the time as we head into economic recession. That's why jobs growth is called a #LateCycle indicator. It's one of the very last metrics to fall at the end of the cycle.
That's why the level of complacency embedded in Wall Street's guesses about jobs growth is palpable. We're now 19 months past the peak in non-farm payroll growth and headed toward 0%. Nothing Wall Street predicts will change this fact.
