Weekly Signal & Noise Filter

Inside the Insane Asylum

The data remains strong, but markets are focused on future risks to the economy and are heavily discounting its current signal value.

For example, markets are treating Friday’s jobs data as old news. Not in chronological terms, but in terms of what it means for the economy: an echo of what the end of 2024 looked like. Solid and fine.

Some observers are flagging the U6 Rate - a broader measure of unemployment that includes those who are underemployed, marginally attached to the workforce, and discouraged workers – which increased by .5%. This was the biggest monthly increase since April 2020, to the highest absolute level of 8% since October 2021.

Getting more granular, the U6 rate was driven by an uptick in part-time workers for economic reasons. This is code for, can’t find full-time work and settling for part-time work. We can isolate the part-timers driving the broader slowdown because the U5 rate, which does not include the part-timers, hardly budged.

This is usually what occurs before a broader labor market slowdown.

Thus, the March report is already expected to be considerably worse – likely below