- by New Deal democrat
Today is Presidents’ Day, so there are no official economic data releases; and there will be no significant releases tomorrow either, before a torrent of both timely and delayed data from Wednesday through Friday, including GDP for Q4.
In the meantime, because of the January updates for employment and inflation last week, one of my important series for forecasting purposes can be updated as well: real aggregate nonsupervisory payrolls.
To recap, this series represents the total amount of paychecks in the economy for all workers except bosses, adjusted for inflation. It is noteworthy not just because the data goes back 60 years, but because it make real world sense: if ordinary working families have less money to spend in real terms, they are likely to cut back spending, and that retrenching brings about a recession.
First, here is the entire historical series. Note it is presented in log scale, so that later data does not obliterate earlier data:
With the exception of the COVID lockdown recession, the series has almost always turned down shortly before a recession has begun; or at very least turned flat.
Here is the same data presented in a YoY fashion:
With the exception of the 2002 “double-dip,” real aggregate nonsupervisory payrolls turning negative YoY has been a perfect indicator of recession, and remaining positive has been a perfect indicator of expansion; and further has typically turned negative within 2 months of the data of onset.
Now here is the post-pandemic look at the absolute series:
The trend has been almost relentlessly higher.
And here is the YoY look:
Again we see that it has never been negative, indeed has never shown less than 1% growth during this entire period.
The one caveat is that because of the poor “shelter” kludge during the government shutdown, which suggested that rent and owners’ equivalent rent had only grown by 0.1% during those two months (vs. their typical 2025 average of 0.3%), the YoY total change should probably be between 0.2% and 0.4% lower, and that problem will persist through next October.
But even so, real aggregate nonsupervisory payrolls are sending an important signal that, despite virtually nonexistent job growth, wage growth has been strong enough to continue to power consumer spending, which in turn is negativing the onset of any recession in the next few months.
