CHART OF THE DAY: Deterioration → Aggregate Hours Worked

01/16/20 07:44AM EST

Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.

CHART OF THE DAY: Deterioration → Aggregate Hours Worked - 1 16 2020 7 55 57 AM

Why do Aggregate Hours Worked matter more than the 15th ranked feature in our model (i.e. the ISM which, btw, just hit a 127-month low anyway!)? That’s easy. Because its marginal accuracy of determining the rate of change in GDP does.

Why are Hours Worked such an awesome coincident indicator? As you can see in the Chart of The Day:

  1. They #accelerated alongside US corporate profits (and GDP) from the back half of 2016 to The Cycle peak in Q318
  2. They started to #decelerated from the profit (and GDP) cycle peak in Q4 of 2018
  3. They’ve #slowed at their fastest pace as US corporate profits #slowed to negative on a year-over-year basis

Not to be confused with the Old Wall where some people are working more hours to get paid less, the Hourly Wage worker in America gets more hours (and compensation that they can then spend) when their boss gives them more hours.

CHART OF THE DAY: Deterioration → Aggregate Hours Worked - 7 Aggregate Hours Worked

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