On the November Jobs Report

A big miss at 210,000 payrolls, offset somewhat by upward revisions to prior months. It is very closely in line with our payroll model based on contemporaneous indicators. Data from the “household survey” is out of line, and far more positive, with a 1.136 million gain in employment, and the labor force expanding by 594,000, driving the unemployment rate down to 4.24% Unemployment rates for blacks, Hispanics and Asians fell more than for whites, bringing their respective gaps from pre-pandemic levels closer to parity, and pointing toward earlier than expected achievement of the Fed’s lift-off criterion for “inclusive” maximum employment. But labor force participation remains low versus pre-pandemic benchmarks overall, disproportionately so for blacks. If the “household survey” data is indicative, markets may be right to expect lift-off by summer. But that wouldn’t be hawkish – rather than an inappropriate political reaction to exaggerated inflation concerns, it could be an appropriate adjustment reflecting recovery and growth.