How Much Slack In The Labor Force?

The full employment zone lasts for 18-24 months. Year over year employment growth hasn’t shown enough signs that it has peaked yet, but given the low unemployment rate, it could be close. The prime age participation rate suggests there’s still a bit more slack left in the labor market. Even if the growth rate has peaked, there probably won’t be a recession in 2019.

Retail Sales Improve

Retail sales growth was a disaster in December as the charts below show.

Those who thought the terrible result would be revised higher were disappointed as every figure was revised lower. Monthly headline sales were down 1.6% instead of 1.2%. Retail sales without autos were 2.1% instead of 1.8%. Without autos and gas, sales were down 1.6% instead of 1.4%. The control group had monthly sales growth of -2.3% instead of -1.7% which was originally reported.

Monthly results improved in January as the results in December made for very easy comps. However, yearly growth only improved modestly. Headline monthly sales growth was 0.2% which doubled estimates. Retail sales growth without autos was 0.9% which tripled estimates. Excluding autos and gas sales growth was 1.2% which doubled the consensus. Finally, sales from the control group were up 1.1% monthly which beat estimates for 0.7% growth.

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