There’s no jobs report tomorrow, but as we told you this morning, we got something pretty close to it today.
Monthly auto sales tend to have a very sweet correlation with the unemployment rate.
In the above line, the red line is the monthly auto divided by the total population, inversed. The blue line is the unemployment rate.
Anyway, monthly auto sales improved in February, hitting a rate of 15.1 million, WAY above last month’s 14.1 million annualized rate. It was also far above the high end of estimates (according to Bloomberg, the most optimistic analyst on the street only foresaw a rate of 14.4 million).
Anyway, just based on that improvement, the correlation between unemployment and autos would suggest a major improvement in the unemployment rate to perhaps 8% or lower. At the moment, the most optimistic analyst on the street is calling for an 8.2% unemployment rate, so there’s a good chance that the number will far surpass the biggest optimist (who is Ellen Zentner from Nomura).
And actually that’s not all.
As Dutch Book at Stone Street Advisors points out, the current trend of initial claims is consistent with a total monthly job creation number of somewhere around 250K. Bottom line. The pieces are falling into place for a big number that’s above what anyone on Wall Street is predicting.