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It’s Jobs Day!

Today the BLS releases its highly-watched “Employment Situation” report, essentially an update on the current state of employment in the U.S. If you’re on the lookout for Jobs Day fireworks, here’s the indicator you need to be watching today: Wage growth.

“Wage growth is the latest of late-cycle indicators.” Hedgeye CEO Keith McCullough explains in the video clip above from The Macro Show. Simply put, if you’re looking for signs that the end is near(er), keep an eye out for any uptick in wages.

Here’s why. “When [a company has] higher profits you get more jobs and the unemployment rate falls,” McCullough. “This is why jobs are a late-cycle indicator. And why wage growth is the latest of late cycle indicator because when you finally get wage growth you’re at the literal beginning of the end of the economic cycle.”

You do the math. After 106 months of economic expansion with no recession no matter how you slice it, this economic expansion is getting late. (The average expansion is 59 months. The longest expansion in history is 120 months. The current expansion is now tied for the second longest in history.)

Understanding this basic relationship between corporate profits, jobs and wages is critical context for what comes next in markets.

Watch the above clip for more.

McCullough: You Need to Know This Ahead of the Jobs Report - the macro show