Just how bad are these job numbers?

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• The unemployment rate remaining steady despite low job creation numbers (e.g., estimated 4,500 added jobs, or private estimates of -13,000 to +22,000) is partly explained by a shrinking or slow-growing U.S. labor force, which lowers the 'break-even jobs number' needed to keep unemployment steady.  Copied to clipboard!
• The 'break-even jobs number'—the jobs needed monthly to prevent the unemployment rate from rising—has drastically fallen from 100,000-200,000 to potentially the low tens of thousands due to slower labor force growth, influenced by factors like reduced immigration.  Copied to clipboard!
• The story of Alessandro Negrete illustrates the personal and economic cost of the Trump administration's immigration crackdown, as skilled, educated undocumented workers are choosing to leave the U.S., representing a loss of human capital for the American economy.  Copied to clipboard!

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January Jobs Data Overview

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(00:00:27)

• Key Takeaway: January unemployment rate held at 4.4%, while private estimates for job additions varied widely, from a loss of 13,000 (Revelio Labs) to a gain of 22,000 (ADP).
• Summary: The Chicago Fed estimated the U.S. unemployment rate for January at 4.4%, unchanged from December. Private sector estimates for job additions in January showed significant divergence, with Revelio Labs estimating a loss of 13,000 jobs and ADP estimating a gain of 22,000 jobs. These low figures contrast sharply with prior months when 140,000 or 260,000 jobs added indicated a strong labor market.

Explaining Low Job Growth Impact

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(00:02:36)

• Key Takeaway: The unemployment rate calculation depends on the labor force size (denominator); a slower-growing labor force means fewer new jobs are required to maintain a steady unemployment rate.
• Summary: Guy Berger explains that the unemployment rate is calculated by dividing the number of unemployed people by the total labor force. If the total American labor force is not growing substantially, the economy needs very few new jobs—or can even sustain job losses—to keep the unemployment rate steady. This trend mirrors aging populations seen in places like Southern Europe or Japan.

Defining Break-Even Jobs Number

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(00:03:43)

• Key Takeaway: The break-even jobs number is the monthly job creation required to prevent the unemployment rate from rising, which has decreased from 100,000-200,000 to potentially the low tens of thousands.
• Summary: The break-even jobs number represents the minimum jobs needed monthly to keep the unemployment rate from increasing. This number used to be 100,000 to 200,000 new jobs per month to maintain an even keel. Current low population growth, caused by fewer people entering the country and increased voluntary departures, has driven this required number down significantly.

Alessandro’s Immigration Story

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(00:04:36)

• Key Takeaway: Alessandro Negrete, an undocumented Angeleno who pursued higher education and professional work, left the U.S. for Guadalajara after his mother received residency and the anti-immigration climate intensified.
• Summary: Alessandro grew up undocumented in LA, initially blocked from a UC Berkeley scholarship due to lacking a Social Security number, leading him to work under the table while attending community college and Cal State LA. He remained in the U.S. during the first Trump administration to care for his mother, who had cancer. After his mother received residency and her cancer went into remission, Alessandro chose to leave the U.S. in September, joining millions of others departing.

Economic Impact of Worker Departure

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(00:08:35)

• Key Takeaway: The departure of skilled workers like Alessandro, who possess education and work experience, represents a tangible loss of human capital for the U.S. economy.
• Summary: Alessandro’s departure means that four decades of his gained education and work experience are now outside the country, impacting the U.S. economy. Economists debate whether a larger population is inherently better for the economy, weighing innovation benefits against the adjustment costs of infrastructure needs like roads and schools.

Retiring the Air Horn

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(00:09:57)

• Key Takeaway: Due to the increasing subtlety and complexity of interpreting modern jobs numbers, the podcast producers decided to retire the air horn sound effect after eight years.
• Summary: The hosts acknowledged the subtlety involved in determining what constitutes a ‘good’ jobs number in the current economic climate. They decided to retire the air horn sound effect, which had been used for eight years to signify strong labor market reports. The episode concluded with a symbolic, albeit excessive, 21-air horn salute to commemorate its run.