A Darkening Short Term Outlook

Goldman Sachs prediction for December NFP is -50 thousand, and Deutsche Bank is -75 thousands. The current Bloomberg consensus of +71 thousand (down from +100 thousand on the 6th).

Figure 1: Nonfarm payroll employment (blue), Bloomberg consensus (light blue square), Goldman Sachs (red +), and Deutsche Bank (green triangle), calculated by adding net job gains onto November actual. Source: BLS, Bloomberg, Goldman Sachs, and Deutsche Bank all as of 1/7, and author’s calculations.




26 thoughts on “A Darkening Short Term Outlook

  1. Moses Herzog

    I don’t know, when does this NFP number come out?? Oh Wait it’s always Friday right?? See my mind works better when I’m drinking, I probably would have remembered that the release was always Friday at about 23:00 tonight if I was sober. Does “AS” want to do a double dare and ask me to predict this one day before the number comes out?? I’m just being silly ‘cuz I’m slightly buzzed on some strawberry sissy alcohol right now and in a pretty good mood. I’m in that magic 3-5 glasses before switching over to “the dark side” segment here. I’ll give it another “whirl” if “AS” asks me to. I get to keep doing this if I beat the consensus number every time, right??

    1. Moses Herzog

      OK, Here is my December 2020 NFP prediction. I’m gonna go with “negative” 148k or a decrease of 148k. If I get it “right” (“right” here reading closer than the consensus), I’ll share my oddball reasoning. If I get it wrong I’ll hang my head in shame and then give every rationalization that’s in the book to mend my ego.

      1. AS

        Good forecast, since it seems the decline in nonfarm employment was 140,000. Now, if we can understand how to make accurate forecasts one month in advance, I would be greatly interested in how to fine tune forecasts.

        1. Moses Herzog

          @ AS
          That will be much harder. I think, what is it called, Macrodata or some of that “immediate” data they have, might be a good place to start, I think Menzie has put some of that stuff up here before and some of those links are at the New York fed. I had a couple drinks last night and am a little tired, but if I get more energy in the next couple days I’ll try and put those links here in this thread. I didn’t actually use those for my number, but it would be a good place to start friend. I’ll try and make it “more honest” and give one at least 2 weeks before. I’m very absent-minded these days, so just give me a short reminder in the most recent comments section 2 weeks from now if I forget.

          1. Moses Herzog

            *Microdata I meant to say, I gotta a quarter bottle left of hair of the dog, but wanted to “re-hydrate” with glass of 68 cent 2liter offbrand Dr Pepper and Torani vanilla first. Hopefully that hair of the dog will have my mind semi-back in about an hour. My brain functions differently in part to I fuel it differently. I’m actually feeling good considering.

            I’m hearing Twitter is finally permanently banning the orange abomination. I would say that’s the correct call. Arguably forever banned, but at least for the next 3 months.

    2. pgl

      BLS schedule is well publicized. Employment report is released at 8:30am Eastern on the first Friday of the next month.

  2. macroduck

    It will be interesting to compare retail sales to retail employment for the holiday period. ADP data had a sharp drop in service sector jobs (-105k) against a more modest drop (-18k) in goods sector employment. Looks like a holiday sales problem. If the terrible performance of brick-and-mortar stores accounts for most of that job loss, while on-line sales make up the slack in holiday spending but not inuring, then structural change is the culprit. Life a the low end of the pay scale continues to suck, sucking more every day.

    1. Moses Herzog

      Would end of the month inventories tell something also on that?? I think a couple numbers on that come out near the end of the month.

  3. ltr

    January 7, 2021



    Cases   ( 22,132,045)
    Deaths   ( 374,124)


    Cases   ( 10,414,044)
    Deaths   ( 150,606)


    Cases   ( 2,889,419)
    Deaths   ( 78,508)


    Cases   ( 2,727,321)
    Deaths   ( 66,841)


    Cases   ( 1,869,306)
    Deaths   ( 39,258)


    Cases   ( 1,479,835)
    Deaths   ( 129,987)


    Cases   ( 635,134)
    Deaths   ( 16,579)


    Cases   ( 87,278)
    Deaths   ( 4,634)

  4. ltr

    January 7, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,153)
    US   ( 1,127)
    France   ( 1,023)
    Mexico   ( 1,003)

    Germany   ( 468)
    Canada   ( 437)
    India   ( 109)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.8%, 2.7% and 2.5% for Mexico, the United Kingdom and France respectively.

  5. ltr


    January 8, 2021

    Chinese mainland reports 53 new COVID-19 cases

    The Chinese mainland on Thursday reported 53 new COVID-19 cases – 37 cases of local transmission and 16 from overseas, the National Health Commission said on Friday.

    The following locally transmitted cases were reported in north and northeast China: 33 in Hebei Province, 2 in Liaoning Province and 1 each in Beijing and Heilongjiang Province.

    Moreover, 57 new asymptomatic COVID-19 cases were recorded, while 458 asymptomatic patients remain under medical observation. No death related to COVID-19 was registered on Thursday, while 17 patients were discharged from hospitals.

    The total number of confirmed COVID-19 cases in China has reached 87,331, and the death toll stands at 4,634.

    Chinese mainland new imported cases


    Chinese mainland new asymptomatic cases


    [ There has been no coronavirus death on the Chinese mainland since the beginning of last May.  Since the beginning of last June there have been only limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

    There are now 521 active coronavirus cases in all on the Chinese mainland, 13 of which cases are classed as serious or critical. ]

  6. ltr


    January 8, 2021

    London Mayor declares ‘major incident’ over COVID-19 hospital pressure

    Mayor of London Sadiq Khan declared the ongoing COIVD-19 outbreak a “major incident” in the British capital on Friday, saying hospitals could be overwhelmed if people do not stay at home.

    “Today I have declared a major incident in London because the threat this virus poses to our city is at crisis point,” he said.

    “One in 30 Londoners now has COVID-19. If we do not take immediate action now, our NHS could be overwhelmed and more people will die.”

  7. AS

    Does a detail data file exist for download that shows new claims for unemployment insurance by job category? The job category of dine-drink employees, FRED series: ces7072200001 saw a decline in employment of about 372,000 jobs from 10,221,100 down to 9,849,100. Knowing the new applications for unemployment insurance may have helped to forecast the decline in employment.

    Interesting that manufacturing employment, FRED series: MANEMP increased from 12,271,000 to 12,309,000, or about 38,000.

    1. Moses Herzog

      Solid question. I don’t have an answer at the moment. The obvious answer is service sector jobs have been hit. Maybe you could reverse engineer it based on the job’s personal/social interaction?? I mean some people will laugh at that, but crazier things have been done.

    2. Moses Herzog

      @ AS
      If you look at the first 3 hardcopy pages of Saturday’s (Weekend) WSJ journal they do some breakdowns. Again it’s mostly service sector type stuff getting hardest hit. They mention that healthcare manufacturers are hiring right now, some of it related to vaccine production, but they also mention manufacturing comprises only 14% of the U.S. labor market. WSJ seems to be trying to sales-pitch the idea that since the labor market supposedly “snapped back” in May=June, that it might do so again very soon. I guess you’ll have to decide for yourself if the used car salesman is selling a lemon car to you or not on that one.

      1. AS

        I saw the article(s) today. Hard for me to convert the verbiage into a forecasting model. For example, I have been fussing with some forecasting models for January nonfarm payroll. My month ahead forecast for nonfarm payroll shows a decline of 57,000. I am not certain how to tweak the employment forecast for possible vaccine successes in the service employment segment. We need a forecasting professional to give us a couple tips. Are the pros using judgment modifications of employment models or are they using proprietary high frequency data series to make mixed frequency models or both?

        1. Moses Herzog

          @ AS
          I get some kind of game-like joy out of following it, so you needn’t thank me. I do think there are a very few professional forecasters who use “judgement calls’, but the vast majority use models. I think, at least for private forecasters there must be some methods relating to how to adjust for virus factors, but they may be “proprietary” or just stuff they wanna keep under their hat. If I see anything along those lines or ideas myself I will pass those a long to you, probably not in this thread, but whatever the most recent thread Menzie or Professor Hamilton posts up. You can give me two weeks, yeah?? I will try to remember to post my best guess then and also any ideas I have on adjustments to models. I don’t imagine you waiting with bated breath on that (hahaha) but if I do have some ideas I will pass them on. As things stand at this moment, I will say I think you’re on the right track with a negative number, but an exact negative number I am much less sure about. Your 57k decline is as good as any at the moment.

  8. macroduck

    Turns out pessimists weren’t pessimistic enough, mostly because shoppers couldn’t, or didn’t, eat at restaurants. Huge destruction of income at the low end.

    The “pent-up demand” idea is not straight forward in this case, though it is widely discussed now. Goods consumption is relatively healthy right now, so catch-up spending will be limited. One doesn’t catch up on restaurant meals or vacations the way one catches up on delayed piano purchases. “Pent-up demand” is bandied about when increased saving is actually meant.

    The marginal propensity to consume is highest among low-wage workers an they have lost income. There is no increase in saving in low income households now that the $600 per week supplement to jobless benefits is gone. Middle and upper income households will increase spending once the pandemic is under control, but probably not to the extent that would occur after other recessions because goods consumption doesn’t need to rebound and actual pent-up demand is limited for services.

    Lower-income households need help. A $2,000 check is help, but a supplement to jobless benefits is better, and better focused on actual need.

    1. Moses Herzog

      @ macroduck
      I credit my cynicism and pessimism as the major factor in getting my NFP number relatively close (hahahaha!!!!) I’m really only halfway joking. I knew my Dad’s German crabby-ness and dark German psyche would come in handy someday.

    1. Moses Herzog

      Your last sentence made me chuckle. But if I think about it long enough it will make me seethe with anger. Antifa more than once has saved the lives of black protesters. Cornel West said it was no exaggeration they saved his life and others from some right-wing extremists (he meant on a personal 1st person experience). Then to be libeled after saving people’s lives?? The ultimate insult. Like carrying a widow and her dog out of a burning house and having someone claim you started the fire.

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