As Democratic strategist James Carville explained in 1972: “It’s the economy, stupid.”
Data from the BLS, chart by Mish
Two new pictures tell the 2024 story.
Age Group Synopsis
Overall: 4.1 up from 3.4
16-19: 12.3 up from 9.3
20-24: 7.9 up from 5.4
25-34: 4.1 up from 3.6
45-54: 2.5 up from 2.1
55+: 2.7 up from 2.3
The overall, 16-19, and 20-24 age group unemployment rates all bottomed in April of 2023.
Since then, the overall unemployment rate increased by 0.6 percentage points, age group 16-19 by 4.0 percentage points, and age group 20-24 by 2.5 percentage points.
Young voters have been hammered on a relative basis.
Unemployment Rate by Race
The unemployment rate of blacks has jumped from 4.8 percent to 6.1 percent while that of whites rose from 3.0 percent to 3.5 percent.
For Hispanics, the unemployment rate jumped from 4.1 percent to 5.0 percent.
I have been talking about the plight of young people and blacks since February. Mainstream media is just now catching on.
Economic Data Paint a Picture of Two Americas
The Wall Street Journal reports Economic Data Paint a Picture of Two Americas
The rich are feeling confident, but lower-income households are growing cautious.
A growing disconnect between the fortunes of upper- and lower-income Americans could account for some of the crossed signals.
In the latest shocker, the Labor Department reported on Friday that the U.S. added 272,000 jobs in May, up from 165,000 in April and much higher than economists’ expectations. The strong reading is especially perplexing because it comes on the heels of a string of weak economic reports in recent weeks, including soft income and spending data for the month of April and a lower-than-expected reading on manufacturing sentiment in May.
Flashback February 2024 MishTalk
Please consider/reconsider my February post: The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
On average, the economy looks OK. But averages are misleading. Several large groups of people are struggling. They all have one thing in common.
Those looking to buy a home but cannot afford the record high prices, are not faring well in this economy.
Q: Who is Unhappy?
A: Young voters and Blacks.
Flashback April 2024 MishTalk
Please consider/reconsider People Who Rent Will Decide the 2024 Presidential Election
A WSJ Swing State Poll show blacks, especially black males, are abandoning Biden in huge numbers.
In the swing states, 30 percent of black males now support Trump. That’s up from 12 percent in the 2020 election. Trump support from black females is up from 6 percent to 11 percent.
The numbers are not directly comparable because the 2020 numbers are national. However, the numbers flash a huge warning sign.
Q: What is it that young voters [and blacks] really have on their minds?
A: Rent
Flashback May 15, 2024 MishTalk
CPI data from the BLS, chart by Mish
Please consider/reconsider CPI Up 0.3 Percent With Rent Still Rising Steeply
Yet Another Groundhog Day for Rent
Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in April. Rent of primary residence has gone up at least 0.4 percent for 32 consecutive months!
The “rents are falling” (or soon will) projections have been based on the price of new leases and cherry picked markets. But existing leases, much more important, keep rising.
I now expect (finally!) we will break the string of 32 consecutive months of rent rising 0.4 percent.
I even went out on a limb with my June 5 post I expect a Fed Rate Cut in July Despite Market View of 18.5 Percent Chance
At the risk of looking silly, I think the market is wrong about the odds of a Fed rate cut in July. Let’s discuss why.
My rationale was very weakening economic data coupled with the expectation of a huge slowdown in the the pace of rent inflation. The bizarro jobs report last Friday cut the July rate cut odds to 8.2 percent.
Even if my July rate cut call is correct (and for now I am sticking with that take) rents are not going back where they were four years ago. Meanwhile, home prices are soaring out of sight.
Case-Shiller Home Prices vs Rent
Case-Shiller national and 10-city indexes via St. Louis Fed, OER, CPI, and Rent from the BLS
Flashback May 2, 2024 Mishtalk
Please consider/reconsider Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation
My comment “Don’t worry, it’s not inflation” is sarcasm.
Ironically, it’s also true, at least according to what I suggest is poor economic theory. Economists consider home prices a capital expense not a consumer expense. Thus, home prices are not in any inflation index.
I disagree with definitions of inflation that ignore obvious inflation. And siding with me are young voters, blacks, and anyone looking to buy a home but is priced out of the market while watching rent soar out of sight.
Adding Insult to Injury
On top of it all, unemployment for younger voters and blacks has jumped considerably.
And Biden/Democrats cannot figure out why Trump is still ahead in the polls despite him being convicted of a felony (in a farce of a trial that never should have taken place in the first place).
Another Bizarro Jobs Report – Payrolls Rise 272,000 Employment Drop 408,000
Nonfarm payrolls and employment levels from the BLS, chart by Mish.
For my take on the allegedly hot May jobs report, please see Another Bizarro Jobs Report – Payrolls Rise 272,000 Employment Drop 408,000
Once again, rational people wonder what’s going on with the jobs report. The discrepancy between the trend in jobs and employment surges again.
In the last year, jobs are up 2.8 million while full-time employment is down 1.2 million.
Job numbers based on the entire data (QCEW – Quarterly Census of Employment and Wages) lag by the monthly jobs report by about 5 months but are far more accurate.
Year-Over-Year Change in Nonfarm Payrolls vs QCEW in Thousands
In my follow-up post on the May jobs report, I ask and answer the question How Much Did the BLS Birth-Death Adjustment Pad the May Jobs Report?
The short answer is the BLS overstated 2023 jobs by 735,000 (all in the fourth quarter) and it may or may not have anything to do with BLS birth-death adjustments.
See the above link for details.
Meanwhile, don’t expect any economic improvements for young voters and blacks because improvement is unlikely even if the Fed gets in a token rate cut or two.
Actually, a Fed rate cut would be a sign of a weakening economy. And a weakening economy would help Trump, not Biden.
