Last Friday’s surprisingly strong April jobs report and today’s unexpected drop in initial unemployment claims were welcome developments in the beleaguered U.S. labour market.
However, the underlying details of the labour market continue to be troubling.
Last week, veteran economist David Rosenberg gave a lengthy 59-slide presentation on the Federal Reserve’s failed efforts to get the economy on track.
Much of the presentation focused on the dynamics of the U.S. workforce.
Rosenberg argued that despite the high unemployment rates, there’s actually a shortage of qualified labour, which is resulting in labour hoarding. Furthermore, there are signs that this is forcing wages to go up, which mean trouble for corporate profit margins. This is ultimately bearish for stocks.