Latest / Markets with Megan: A Quick Financial Markets Update / Biggest Underemployment Spike Since 2020 | S2 E018 | 03-07-25

Transcript

Biggest Underemployment Spike Since 2020 | S2 E018 | 03-07-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: In yesterday's podcast we warned that the employment report tends to be a market-moving event, and we did see this today.
• 0:07
  Megan Horneman: It is Friday, march the 7th, and it is Markets with Megan.
• 0:10
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• 0:13
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• 0:16
  Megan Horneman: But let's dig into what we saw today and why the market has whipsawed back and forth throughout the day.
• 0:22
  Megan Horneman: So we got our monthly employment report and what we saw was that the job gains for the month weren't bad 151,000 private payrolls.
• 0:31
  Megan Horneman: The expectation was for 160,000.
• 0:35
  Megan Horneman: So that's marginal.
• 0:38
  Megan Horneman: That's not what concerned the market and why we spent most of the day with equities in the red.
• 0:42
  Megan Horneman: What we saw was a small uptick in the unemployment rate, so it went from 4% to 4.1.
• 0:48
  Megan Horneman: That concerned investors.
• 0:50
  Megan Horneman: And then when you look at something like the underemployment rate the underemployment rate is a rate that measures those people that would like to work full-time but are working part-time for economic reasons and that saw the biggest jump we've seen since April of 2020, when we were in the depths of the pandemic, and even though it may look like a small blip, it's actually the highest level that we've seen since October of 2021, at 8%.
• 1:17
  Megan Horneman: Some of the other details of this report were that the hours worked declined, so that means that companies are having their employees work less.
• 1:26
  Megan Horneman: This tends to be a leading indicator of what we may see for the unemployment rate in the future.
• 1:32
  Megan Horneman: The other areas that we look at was on what does it mean on the inflation side that wage pressure?
• 1:37
  Megan Horneman: We saw that wages were relatively contained.
• 1:40
  Megan Horneman: We saw a 0.3% increase for the month, which brought the year over year level at 4%, slightly higher than last month, but below the expectation of 4.1.
• 1:51
  Megan Horneman: So that was welcome news for the Fed.
• 1:53
  Megan Horneman: The biggest question is what does that mean for the Fed?
• 1:55
  Megan Horneman: Why did the markets turn around so much today?
• 1:58
  Megan Horneman: Well, the Fed is meeting again in a couple weeks.
• 2:01
  Megan Horneman: Right now, the expectation is the Fed won't do anything at the meeting, but the concern is that they're stuck in a situation where they can't do anything and the labor market is deteriorating rapidly.
• 2:12
  Megan Horneman: But in about later this afternoon, general Chairman Powell came out and reaffirmed that he still believes that the economy is on solid ground, the labor market is okay.
• 2:23
  Megan Horneman: So that eased some of the concern and we saw the markets turn back around.
• 2:26
  Megan Horneman: The next big thing to pay attention to will be next week's inflation data.
• 2:30
  Megan Horneman: This is what the Fed's gonna be looking at before they come forward with their meetings.
• 2:35
  Megan Horneman: So we have CPI and PPI both next week and the week.
• 2:39
  Megan Horneman: We'll round out with the confidence number for the preliminary reading for March.
• 2:43
  Megan Horneman: That's all we have.
• 2:45
  Megan Horneman: If you'd like to see a history of our podcast, please go to marketswithmeganfm.
• 2:49
  Megan Horneman: Thank you.