US Labor Markets

The US labor market recovery continues to be slow, but it is taking place. In H1 2009, the US lost an average of 559k jobs a month and in H2 the average job loss was 134k. The average job loss in Q4 was 69k vs 199k in Q3. Looking ahead, weather-induced job losses should help boost numbers, even here in January. The bulk of the 1.15 mln Census Dept workers still need to be hired. On the other hand, the 650k who left the labor market, which allowed the unemployment rate to remain steady will also have to be absorbed at some point. Meanwhile, the American household continues to de-leverage. Consumer credit fell a record $17.5 bln in November, the 10th consecutive monthly decline. This was three times greater than the consensus had forecast. However, the paying did not stand in the way of the strong Nov retail sales (1.2%). Nor will it prevent a robust Dec retail sales report later this week (Jan 14th). Lastly, we note that various measures of US inflation expectations continue to rise. At 2.82% the 5yr/5yr forward, for example, is up 35 bp since late November.