With the updating of GDP and April sales data, let's take a look at two leading indicators for employment growth.
First of all, real YoY GDP (minus 2%) tends to lead employment by about a quarter or two. This relationship has held up well both during the "great recession" and also the recovery since then. Unfortunately it suggest that 3-6 months from now we will see very sluggish job growth. As in 5 figures, or possibly even one or two negative months:
Now here is the comparison including March real retail sales (which, you may recall, were negative for the first time since last summer):
This relationship gives room for more optimism, although candidly it is disappointing that the relationship has not fared so well during the recovery (although it is closer if we look at hours worked rather than jobs created).
We really need commodity prices and especailly gasoline to reverse trajectory. If there is another Oil-shock stall, there is going to be another stall in employment, which is the last thing we need.
