Jobs aren’t plentiful yet, but they are less hard to get. That’s the opinion of the folks who responded to February’s survey of consumer confidence conducted by the Conference Board. Whenever this monthly survey, that is used to construct the Consumer Confidence Index, is released, I immediately search for the response rate to the question about whether “jobs are hard to get.” It fell sharply from 43.3% in January to 38.7% in February, the lowest reading since November 2008. Initial unemployment claims is a leading indicator for the JHTG response series. The drop in the former is signaling that fewer workers are getting fired, while the drop in the latter suggests that it’s getting easier to get hired.
The JHTG series is highly correlated with the official unemployment rate. This close relationship suggests that the jobless rate, which dropped from 8.5% during December to 8.3% during January, could soon fall below 8.0%. Increasingly, it seems to me that the Old Normal business cycle is still very much in gear. The abnormality was the depth of the recession, not the shape of the recovery. Some of our accounts who regularly talk to company managements are hearing that more companies are having trouble finding the employees they need. I wouldn’t be surprised by a hiring panic in coming months that lowers the JHTG response back down to its Old Normal levels of 20%-30%.
So what about that big 4.0% drop in durable goods orders during January reported yesterday? Why would companies hire more workers if they are reducing their capital spending? Not so fast: Durable goods orders are very volatile. They were up 7.5% during November and December. The recent volatility was undoubtedly exacerbated by the expiration of the 100% depreciation allowance at the end of last year. The upward trend in orders remains intact. This is confirmed by February’s strong batch of business conditions surveys reported by the Feds of Richmond, Kansas City, and Dallas. If you want to worry about something, then worry about home prices; they are still falling around the country. (More for subscribers.)