Latest / Markets with Megan: A Quick Financial Markets Update / Jobs Report Shocker: Is Inflation About to Surge? | S2 E010 | 02-07-25

Transcript

Jobs Report Shocker: Is Inflation About to Surge? | S2 E010 | 02-07-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Well, the much-anticipated employment report for the first month of 2025 is behind us.
• 0:05
  Megan Horneman: It's Friday, february 7th, and today we got the employment report for the month of January and unfortunately, the data that came in the number of jobs that were created was slightly lower than expected.
• 0:18
  Megan Horneman: But this is one of those situations where be careful what you read or see in the headlines, because the revisions that we saw in the prior two months actually added another over 100,000 jobs.
• 0:29
  Megan Horneman: So if you net that out, it's a pretty strong jobs report from a job creation perspective.
• 0:33
  Megan Horneman: Now we did start to see some of the weakness from whether it's the wildfires or the weather conditions that we've had.
• 0:41
  Megan Horneman: This is starting to impact the data just a bit.
• 0:44
  Megan Horneman: Conditions that we've had this is starting to impact the data just a bit.
• 0:48
  Megan Horneman: When you look at the hours worked, that actually dropped to the lowest level we've seen since the onset of the pandemic, so that could reflect some of this disruption to the labor market because of the natural disasters.
• 0:57
  Megan Horneman: We also saw that, more than you know, it was actually almost 2 million people that either couldn't work in the month of January or could only work part-time due to weather-related conditions, so it's not an insignificant amount of jobs there and disruption in the month of January.
• 1:14
  Megan Horneman: However, if you look at some of the strong things in this report, so not only that headline number as far as the jobs created with the revisions of the prior month, but the unemployment rate actually ticked lower to 4% and we saw the labor force participation rate actually tick a little bit higher.
• 1:31
  Megan Horneman: So still strong demand for jobs.
• 1:34
  Megan Horneman: Now what does all this mean?
• 1:35
  Megan Horneman: We get this report every month and it tends to move markets.
• 1:39
  Megan Horneman: We're seeing today, equities are down, the Dow is down in the triple digits, we're seeing bond prices are down and yields are higher.
• 1:46
  Megan Horneman: This is all reflecting the stuff I'm going to talk about in a second here, and this is inflation.
• 1:50
  Megan Horneman: What does inflation have to do with a payroll report?
• 1:54
  Megan Horneman: Well, if we see wage pressures or wage inflation continue to increase, this can actually create this vicious circle of fueling more broad-based rise in prices, because now consumers feel compelled to spend more.
• 2:08
  Megan Horneman: We actually saw the hours worked on a year-over-year basis rise 4.1%.
• 2:14
  Megan Horneman: There was the expectation they would only rise 3.8%, but they were also revised higher for the prior month to 4.1%.
• 2:21
  Megan Horneman: So the wage growth is good for the consumer, but it can fuel inflation.
• 2:27
  Megan Horneman: So the Fed's going to take a close look at that.
• 2:29
  Megan Horneman: The other thing, just from a market perspective today after that employment data is digested after 8.30, we at 10 o'clock get the consumer confidence report and following along that inflation story, if you look at the consumer confidence report that we got today for the first couple of weeks here, the first week we've had here in February, showing that inflation expectations for the next one year time period jumped a full percent from 3.3 to 4.3.
• 2:56
  Megan Horneman: So consumer confidence is down.
• 2:59
  Megan Horneman: You're looking at inflation expectations by the consumer higher.
• 3:02
  Megan Horneman: These all are what's leading into this weakness here in the equity market, in the bond market.
• 3:07
  Megan Horneman: The biggest concern consumers have is what will the tariffs mean for inflation?
• 3:12
  Megan Horneman: And again it's a Friday and we're getting some more headlines out about tariffs.
• 3:15
  Megan Horneman: So it'll be a very interesting weekend to kind of separate what's the truth and what's not, and then back on Monday morning with what could open up to be a volatile Monday morning for the markets.
• 3:26
  Megan Horneman: That's all we have today.
• 3:27
  Megan Horneman: We'll be back next week with a bunch more of economic data.
• 3:30
  Megan Horneman: If you like this podcast, please subscribe, hit that alarm bell, send it to friends, family or colleagues and then if you want a history of our podcast.
• 3:39
  Megan Horneman: You can go to marketswithmeganfm.
• 3:41
  Megan Horneman: Thank you.