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Hard data defies soft patch

| Posted by: Paul Donovan | Tags: Paul Donovan Weekly

Economists do not have to dig very deep in the data to find ongoing economic strength. The jobs market shows that the US and Europe continue to do well. Structural changes like rising self-employment make a lot of jobs numbers a little old fashioned. But this means that, if anything, jobs data underestimates economic strength.

In the US, employers are scrambling to find people to fill jobs. It takes longer and longer to find someone to fill a vacant position. More and more staff choose to quit and go somewhere else.  Why are people quitting? Because what the US Fed charmingly calls "job switchers" are getting 4% more wages when they move.

The Eurozone jobs market has more slack than the US, but it is getting stronger fast. There was a big rise in job vacancy rates in the first quarter. The number of people without a job or with a job but working less than they want keeps dropping.

The US and European jobs markets are good. They are giving consumers wages, and the confidence to go and spend those wages. Normal people care about whether or not they have a job far more than political noise.